Paraguay’s President Impeached and Placed Under House Arrest Following Bank Collapse

Paraguayan President Santiago Peña was impeached by lawmakers and placed under house arrest on Friday following the catastrophic collapse of a U.S.-owned digital lender with deep ties to his administration. The sudden failure of Ueno Bank has frozen accounts across the nation, leaving millions of citizens without access to their funds. Peña, a pro-market leader and key Washington ally, previously held shares in the institution. The digital bank boasted roughly 3 million customers, representing more than half of Paraguay’s adult population. Central bank officials seized control of Ueno Bank on Tuesday after confirming its solvency ratio no longer satisfied legal requirements for financial viability.

Legislators Reject Resignation, Vote to Impeach

Although Peña announced his intention to resign on Thursday while denying any personal wrongdoing, congress members refused to accept his resignation. Instead, they pressed forward with formal impeachment proceedings. During a Senate session on Friday, lawmakers voted unanimously to find Peña guilty of malfeasance in office, according to the Senate’s website. Legislative leaders accused him of risking state assets and using his position for personal enrichment through his connection to the lender. Following the vote, prosecutors charged the former leader with breach of trust and ordered him detained at home. Peña stood before prosecutors on Saturday morning as judicial proceedings continued. “I want to apologize to the Paraguayan people if I have failed you,” Peña said during an address shared on social media. Peña’s removal marks the first presidential impeachment in Paraguay since 2012, when the legislature ousted then-President Fernando Lugo.

Street Protests and a New Administration

The financial crisis sparked widespread civil unrest across the capital city of Asunción. Demonstrators gathered in the main square near the National Congress on November 5, 2026, burning images of Peña to protest the banking collapse and the political scandal. Ueno Bank had built its massive user base largely by offering grocery cash-back incentives, which drew in more than a million first-time account holders. The central bank intervention abruptly halted those operations, triggering panic among depositors. Vice President Pedro Alliana took the oath of office on Friday to assume the presidency. He is scheduled to serve out the remainder of Peña’s term, which runs through August 2028. In his inaugural speech as head of state, Alliana promised swift government intervention to compensate citizens who lost money in the Ueno Bank failure.