Paraguay’s parliament removes President Peña over bank collapse

Paraguay’s parliament has removed President Santiago Peña from office over a large-scale banking crisis. Vice President Pedro Alliana becomes the new head of state and will remain in the post until 2028. 44 of 45 senators voted to remove Peña, AFP reports.

What happened to Ueno Bank

The crisis began after the state took control of Ueno Bank, when the regulator feared the bank would not be able to meet its obligations. As a result, almost half of the country’s residents lost access to their money. Thousands of people took to the streets demanding that Peña be held accountable.

Ueno Bank started out as a small fintech company betting on digital services. Its focus on low-income customers fueled rapid growth, and over time it became a major bank. It handled the payment of state pensions and kept the accounts of several government agencies. The bank also sponsors several top-flight clubs and the Paraguay national football team, so its financial problems have hit football as well.

Why Peña is under fire

Until last year, Peña held a stake in Grupo Vázquez, the company that controlled the bank. The opposition accused him of a conflict of interest, which he denies. Prosecutors are investigating whether he influenced the oversight of the bank and whether he placed public funds in it. Peña is due to be questioned on Saturday on suspicion of breach of trust and embezzlement. Shortly after his removal, he was placed under house arrest.

What the new president promises

Alliana has promised full compensation to almost three million bank customers, many of them pensioners. The central bank has already begun paying the first advances to those affected. Opposition lawmakers proposed launching removal proceedings against Alliana himself, but parliament did not back the proposal.

The fallout from the crisis is already significant: the head of the central bank and the interior minister have resigned, eight Ueno Bank executives have been arrested, and police have searched several locations linked to Grupo Vázquez. The wave has also reached neighboring Argentina, where ITTI, a technology company in the Grupo Vázquez group, has suspended roughly a thousand employees for 30 days without pay.

Around Prague, based on reporting by seznamzpravy.cz