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Paraguay woke up on Friday to a new president — and its old one under house arrest. In a matter of hours, the Senate removed Santiago Peña from office over the collapse of Ueno Bank, prosecutors ordered him detained at home, and Vice President Pedro Alliana was sworn in to serve out the term. It is one of the fastest falls of a sitting president in South America in years — and it began with a bank holding the savings of nearly half the country.
What happened on Friday
All 44 senators present voted to remove Peña for misconduct in office, the second such ouster since the country returned to democracy in 1989. Peña had announced his resignation the day before, but lawmakers pressed ahead with the vote anyway.
Shortly after, prosecutors ordered Peña held at his home on suspicion of breach of trust, until he can appear before the economic crimes and anti-corruption unit on Saturday. The attorney general's office confirmed the detention to The Associated Press and has opened three criminal cases against Peña and other former officials. Alliana was sworn in later on Friday and will serve out the term, which ends in August 2028. In Washington the same week, Donald Trump named Stephen Miller his new White House chief of staff.
The bank at the centre of it all
Ueno was Paraguay's biggest digital bank, with about 2.9 million customers in a country of just over 6.1 million people — nearly half the population, many of them first-time account holders. On Tuesday, regulators took the bank over after finding that its solvency ratio had fallen below half of the legally required minimum.
The seizure cut almost three million customers off from their savings and bank cards, setting off protests and what the AP calls the country's worst political crisis in more than a decade. The verdict came just three days after the takeover.
What Peña is accused of
Lawmakers accused Peña of using his political influence to steer hundreds of millions of dollars in public funds into Ueno while regulators overlooked risky insider lending. Prosecutors have charged 27 people, including Ueno's controlling shareholder Miguel Vázquez, with crimes including breach of trust and attempted fraud, and six bank directors are in pretrial detention.
An arrest was also ordered for Carlos Carvallo, the former central bank chief Peña appointed, who previously ran the finance company that became Ueno. Breach of trust carries up to five years in prison, or up to ten in serious cases. Prosecutors say the exact charges against Peña are still being determined, but could include influence peddling. He will remain under house arrest until a judge decides where he stays during the criminal process.
Why this matters beyond Paraguay
The speed is the story. Four days passed between the bank's seizure and a president's removal — a reminder of how quickly a financial failure can become a political one when the institution at fault touches half a population. Ueno was a symbol of financial inclusion, built for people the old system had ignored — and its collapse shows how fast a fintech success story can turn into a systemic risk when oversight fails.
For the region, the precedent is stark: a legislature willing to remove its own president in days, not months, when savers' money is at stake. The same week, American voters delivered a midterm verdict of their own. Alliana now inherits the hard part: restoring confidence, getting three million savers their money back, and proving the prosecution is about the bank, not politics.
Friday settled one question: in Paraguay, a bank failure can now end a presidency. What happens next depends on whether the new government can return people's money — and whether the courts can prove what the Senate has already decided.
Sources: Associated Press and Geo News / Reuters.