Crisis-hit Paraguay impeaches Peña over bank crisis, replaces him with VP Alliana

Santiago Peña lost the presidency after lawmakers blamed his administration for the chaotic collapse and takeover of Ueno Bank. The crisis locked almost half the country out of bank accounts and affected almost three million depositors. Senators declared Peña guilty of poor performance in his duties.

The Senate vote was overwhelming. Forty-four of 45 senators supported impeachment, while one was absent. Peña had offered to resign, but lawmakers continued proceedings and removed his political immunity. Authorities placed him under house arrest minutes after the vote.

Pedro Alliana, Peña’s former vice-president, was then appointed president by the Senate. He promised full compensation for affected depositors and will remain in office until 2028. Peña also faces questioning over alleged breach of trust, influence-peddling, and misappropriation of funds.

Impeachment is a constitutional process in which lawmakers investigate and vote on whether a public official should be removed. It is not simply an ordinary political disagreement. The process can strip an official of office and, in some systems, political protections.

In Peña’s case, Senate President Basilio Nunez declared him guilty of “poor performance in his duties.” Forty-four of 45 senators voted for removal, with one absent. The decision followed the collapse of Ueno Bank and accusations that Peña had conflicts of interest connected to the bank.

The finding ended Peña’s presidency and removed his political immunity. It did not by itself settle all possible criminal allegations. Prosecutors said they would question him about alleged breach of trust, influence-peddling, and misappropriation of funds linked to Ueno Bank and public money.

The crisis affected almost three million Ueno Bank depositors, including pensioners. The bank’s takeover amid insolvency concerns disrupted access to savings and triggered protests across Paraguay. The scale made the collapse a national financial and political emergency.

The first aid phase covered eligible customers who had no loans and held an account at another Paraguayan bank or institution. Those customers could receive advance payments of up to around US$1,600. José Maciel of the Central Bank’s Deposit Guarantee Fund said payments began on Thursday afternoon.

That initial amount was not the complete promised recovery for everyone. Maciel said further beneficiaries would be announced progressively during the payment process. Pedro Alliana also promised that affected compatriots would be fully compensated, although the article does not give a final timetable or total cost.

Depositors faced blocked access to their money and demanded repayment in protests lasting several nights. The crisis affected families, pensioners, business owners, and small businesses. Advance payments began, but only eligible customers received the first phase, worth up to around US$1,600.

The political consequences were severe. Peña was impeached and placed under house arrest. Central Bank President Carlos Carvallo and Interior Minister Enrique Riera lost their positions. Eight Ueno executives were arrested, while police raided locations connected to Grupo Vázquez, the group that controlled Ueno.

The damage spread beyond depositors and officials. About 1,000 employees of Argentine technology company ITTI, part of Grupo Vázquez, were suspended for 30 days without pay. Ueno also sponsored several first-division football teams and Paraguay’s national team, which said they were victims of the situation.

A conflict of interest can arise when a public official’s personal or financial connections overlap with official decisions. The concern is not automatically proof of wrongdoing. It is a question of whether private interests could influence public duties or undermine public trust.

The article says Peña had a stake in Grupo Vázquez until last year. That group controlled Ueno Bank, the institution at the center of the crisis. Prosecutors were investigating acts related to supervision and resolution of Ueno and the placement of public funds in the bank. Opposition lawmakers accused Peña of a conflict of interest, which he denied.

The connection became especially important after Ueno’s collapse and takeover amid insolvency concerns. Peña lost political immunity after impeachment and was due to be questioned about alleged breach of trust, influence-peddling, and misappropriation of funds. The article does not establish that he committed those alleged crimes.

Bank insolvency occurs when a bank cannot pay what it owes as debts come due, or when its obligations exceed the value of its assets. In practical terms, customers may find that normal withdrawals or transfers are temporarily unavailable. This explanation uses established banking knowledge; the article only says Ueno faced insolvency concerns.

A failure or takeover can interrupt access because regulators must secure records, assess the bank’s finances, and protect remaining assets. They may limit transactions while deciding which deposits can be transferred, guaranteed, or repaid. That process can leave customers waiting, even when they are eventually entitled to compensation.

The article describes Ueno’s takeover as locking almost half the country out of accounts and affecting nearly three million depositors. Advance payments then began for some customers. The Central Bank’s Deposit Guarantee Fund handled the first phase, while Alliana promised full compensation.

Deposit-guarantee funds are financial safety nets that repay eligible depositors when a bank fails. A central bank can supervise the failing institution, manage its resolution, and coordinate payments. These protections help customers recover money without waiting for every asset or legal dispute to be settled. This general explanation goes beyond the article’s brief description.

In Paraguay’s case, José Maciel represented the Central Bank’s Deposit Guarantee Fund. The first payments went to customers without loans who had another Paraguayan account or institution able to receive the money. The initial amount was up to around US$1,600. The article says advance payments began Thursday afternoon.

Compensation can be staged because authorities must verify depositors, determine eligibility, process claims, and organize transfers. They may also prioritize simpler cases before more complicated ones. Maciel said further beneficiaries would be announced progressively. Alliana separately promised full compensation for affected depositors.