Former Paraguayan President Santiago Peña has been impeached by Congress and faces criminal charges following the collapse of Ueno Bank, a digital lender that has paralyzed access to savings for nearly half of the nation’s population. The crisis has led to Peña’s removal from office and subsequent placement under house arrest as prosecutors investigate his alleged role in the financial downfall.
According to details received by The Chenab Times, the collapse of Ueno Bank, which saw its solvency ratio fall drastically, has left an estimated 2.9 million customers locked out of their funds. This unprecedented financial crisis in Paraguay, the most severe since 1995, has triggered widespread public protests and a political upheaval that saw Peña impeached by the Senate.
The impeachment proceedings against Peña were initiated after the Central Bank of Paraguay seized Ueno Bank on November 3, citing a severe capital shortage. While Peña initially offered to resign, Congress declined his offer, opting instead for impeachment. The lower house voted 78-0 to impeach him, and subsequently, all 44 senators present voted to remove him for misconduct in office. Vice President Pedro Alliana was sworn in as the new president on the same day.
Peña is now under investigation for alleged breach of trust, influence peddling, and using public office for personal gain, offenses that carry potential prison sentences of up to 10 years. Lawmakers accuse him of leveraging his political influence to direct hundreds of millions of dollars in public funds into Ueno Bank. Despite these accusations, Peña has denied any wrongdoing.
The crisis has deeply impacted Paraguay, a nation of approximately 6.4 million people. Beyond the individual depositors, state institutions, cooperatives, and pension funds also held significant funds in Ueno Bank, exacerbating the financial distress. The situation has led to widespread social unrest, with angry customers demanding access to their savings and unions announcing strikes.
Investigations by the Public Prosecutor’s Office are examining the oversight of Ueno Bank by regulatory authorities, the handling of its failure, and the placement of public funds within the institution. Prosecutors have also charged 27 bank officials and associates with breach of trust and attempted fraud. Among those facing charges are former Central Bank president Carlos Carvallo, who previously headed Ueno’s predecessor, and Miguel Vázquez, the founder of Ueno. Both Carvallo and Vázquez are also facing detention as part of the ongoing investigation.
The roots of the crisis trace back to June, when inspectors at the central bank identified a pattern of risky lending to insiders at Ueno. Despite assurances from Peña in October that a regulatory inquiry did not signal the bank’s closure, the situation escalated rapidly. The bank’s rapid expansion from a finance company into one of Paraguay’s largest lenders in just a few years has been attributed by analysts to favorable government actions, including changes in laws and the appointment of key officials with ties to the bank.
Peña’s alleged conflict of interest is a central theme in the investigation. He reportedly held shares in Ueno Holding, the parent company of Ueno Bank, until March 2025, nearly two years into his presidency. While he declared a stake in August 2023, he maintained that the holding never owned shares directly in the bank. These financial links, coupled with his appointment of Carlos Carvallo, a former head of Financiera Ueno, to lead the Central Bank, form a significant part of the impeachment charges filed by lawmakers.
The political fallout from the Ueno Bank collapse is significant, marking a major crisis for Paraguay since its return to democratic rule in 1989. Peña’s impeachment is the second such instance for a Paraguayan president since the end of General Alfredo Stroessner’s dictatorship. The ongoing investigations aim to uncover the full extent of the alleged financial misconduct and to restore confidence in the nation’s financial system.
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