Paraguay President Santiago Peña Impeached and Arrested Amid Massive Banking Scandal

Paraguay has been plunged into a political crisis following the impeachment and arrest of President Santiago Peña, whose administration collapsed amid a major banking scandal that has left millions of people unable to access their savings.

Peña was removed from office on Friday, November 6, after all 44 senators present voted to convict him of misconduct in office, including members of his own ruling Colorado Party.

Authorities subsequently placed the former president under house arrest at his residence in Asunción as prosecutors pursued allegations linked to the collapse of Ueno Bank, one of the country's major digital lenders.

Vice President Pedro Alliana was sworn in as Paraguay's new president shortly after the Senate vote. He is expected to serve the remainder of the presidential term, which ends in August 2028.

The extraordinary developments followed the intervention of Ueno Bank by Paraguay's central bank earlier in the week, triggering widespread financial disruption and public anger.

Nearly three million customers were affected by the suspension of banking services, leaving many unable to withdraw savings, access wages or complete everyday transactions.

The banking crisis also sparked protests as customers demanded access to their money and accountability from government officials.

Peña faces allegations of breach of trust, influence peddling and using public office for personal gain.

Lawmakers have accused him of using his political influence to direct hundreds of millions of dollars in public funds into Ueno Bank while regulators allegedly failed to address risky financial practices.

The former president has denied wrongdoing.

The impeachment came after Peña attempted to resign on Thursday, November 5, but lawmakers proceeded with formal removal proceedings.

Under Paraguay's Constitution, former elected presidents are generally entitled to lifetime seats in the Senate, which carry legal protections. However, removal through impeachment prevents Peña from receiving that privilege.

His removal marks the second time a Paraguayan president has been ousted through impeachment since the end of military rule in 1989.

The banking scandal has also widened beyond the former president, with prosecutors investigating bank executives, financial regulators and other officials over the institution's collapse.

As the political fallout continues, newly sworn-in President Alliana has pledged to compensate customers affected by the banking crisis.

The country's central bank has indicated that deposit insurance arrangements should cover the full balances of approximately 97 per cent of Ueno Bank customers.

However, the collapse has raised serious concerns about financial oversight, the handling of public funds and the wider stability of Paraguay's banking system.

Peña is expected to face prosecutors as investigations continue into the circumstances surrounding the bank's failure and his alleged involvement.