Paraguay’s former President Santiago Pena has been placed under house arrest following his impeachment over alleged misconduct linked to the collapse of Ueno Bank, as former Vice President Pedro Alliana was sworn in as the country’s new leader.
Alliana, 52, took the oath of office on Friday, becoming Paraguay’s 53rd president after lawmakers removed Pena from office amid a deepening financial and political crisis.
Pena’s removal followed a Senate impeachment vote in which 44 of the 45 senators supported his ouster, while one abstained.
The former president, who belongs to the long-ruling Colorado Party, had earlier offered to resign but saw his departure rejected by Congress, which opted to proceed with impeachment.
“I take my leave with gratitude, while fully acknowledging the anguish of those who are currently awaiting answers,” Pena wrote on social media on Friday afternoon.
Following his removal, prosecutors ordered Pena to be placed under house arrest over suspicions of breach of trust and other offences.
An arrest warrant was also issued for Carlos Carvallo, the former governor of Paraguay’s central bank, who has been accused of failing to properly supervise the lender. Carvallo resigned earlier in the week.
The crisis erupted on Tuesday after the central bank announced that Ueno Bank had fallen below the required solvency standards, indicating that it lacked sufficient collateral to cover its loans and other financial commitments.
Authorities subsequently seized the institution and transferred its remaining assets to other banks as a safeguard.
The shutdown disrupted access to accounts and pension payments for millions of customers.
With approximately three million clients, Ueno Bank served nearly two-thirds of Paraguay’s adult population and had become the country’s fifth-largest bank by deposits, with $800m in public funds supporting its expansion.
The bank, which consolidated under the Ueno brand in 2023, had claimed that more than one million Paraguayans opened their first bank accounts through its services.
Pena was identified as a shareholder in Ueno’s parent company in 2023, although he maintained that he sold his shares in early 2025.
His connections with the lender have raised concerns about possible conflicts of interest and whether the bank benefited from favourable treatment by government institutions.
The former president had offered to step down following the bank’s collapse, citing “the need to preserve our democratic institutions”.
However, Congress rejected his resignation on Thursday and continued with impeachment proceedings.
The Chamber of Deputies voted 78-0 to impeach Pena, paving the way for his removal by the Senate.
Lawmakers, however, declined to initiate impeachment proceedings against Alliana.
Pena’s Colorado Party supported the impeachment move. The party has dominated Paraguayan politics since 1948.
“We support the impeachment of the president of the republic, Santiago Pena, in order to restore the republic’s institutions,” former president and party leader Horacio Cartes said in a statement.
The impeachment process was accelerated partly because a resignation would have allowed Pena to retain his right to join the Senate as a former president, with legal protections against prosecution.
Alliana, who served as Pena’s vice president from 2023, began his political career as governor of Neembucu, a department in southern Paraguay.
He also spent nearly a decade in the Chamber of Deputies, including three years as its president.
The new president assumes office as the country grapples with one of its most serious political and financial scandals in recent years.
Prosecutors are investigating allegations that Ueno Bank was shielded from accountability because of its government connections, with about $355m in state pension funds reportedly invested in the institution.
At least 27 people, including the bank’s lead shareholder, Miguel Vazquez, are facing criminal charges connected to the scandal.
The allegations under investigation include attempted fraud, breach of trust, misappropriation of funds and influence peddling.
Pena has indicated his willingness to cooperate with the investigation but did not personally attend Friday’s impeachment proceedings, opting to send his lawyers.
“I do not wish for my presence to be a source of greater division or instability. It is my responsibility to place the country above my own personal fate,” he said in a statement.
Earlier, Pena had expressed concern over the speed of the Senate proceedings and requested more time to defend himself, arguing that the allotted period was insufficient to exercise “his constitutional right to a defence”.
