Paraguay's President Removed and Put Under House Arrest After Bank Collapse

Paraguay's Senate removed President Santiago Peña from office on Friday and prosecutors placed him under house arrest, days after the collapse of Ueno Bank left millions of people unable to reach their money, NPR reported. Peña appeared before prosecutors Saturday morning.

Vice President Pedro Alliana has been sworn in to finish the term, which runs until August 2028. He said he would act to compensate people who lost money in the bank's failure.

What happened to Ueno Bank and the president

According to NPR, Paraguay's central bank took control of Ueno Bank on Tuesday. It said the lender's solvency ratio, a measure of long-term financial viability, no longer met legal standards. Protests broke out across the capital, Asunción, after the seizure.

Ueno was a digital lender with about 3 million customers, more than half of the country's adult population. The bank had said more than a million people opened an account for the first time through its services, which included generous cash back offers on groceries. Peña was a shareholder in the bank, which NPR describes as U.S.-owned and tied to Paraguay's government.

On Thursday, Peña announced he would resign. Lawmakers declined to accept the resignation and pressed ahead with impeachment. On Friday, senators unanimously found him guilty of malfeasance in office, according to the Senate's website. Prosecutors then accused him of breach of trust, among other charges, and put him under house arrest.

What lawmakers and prosecutors say

Legislators argued that Peña put state assets at risk and benefited himself through his connection to Ueno Bank. The Senate's unanimous finding of malfeasance was the basis for removing him.

Prosecutors have separately accused him of a breach of trust and other charges. NPR did not list the other charges. A trial has proceeded against him, and he was due before prosecutors on Saturday.

What Peña says

Peña has denied wrongdoing. He is known as a pro-market leader who focused on making it easier to do business in Paraguay, and he is one of Washington's closest allies in the region, NPR reported.

In a speech posted to social media, he offered an apology to the public. He said:

“I want to apologize to the Paraguayan people if I have failed you.”

His offer to resign on Thursday came before the Senate vote, though lawmakers rejected it.

Why it matters for Paraguayans

The most immediate effect is on the roughly 3 million Ueno customers. Many of them used the bank as their main or only account, and NPR reported that millions across the country are now without access to their money.

Alliana said in a speech on Friday that he would take action to compensate those who lost money. Details of how that would work, including its cost and timing, were not disclosed.

The political fallout is also significant. NPR noted that the last Paraguayan president removed from office was Fernando Lugo in 2012. Peña's removal makes Alliana the country's leader for the remainder of the term.

What is at stake

For Peña, the stakes are legal: the charges brought by prosecutors and the trial that has proceeded against him. For the government, the stakes are whether it can reassure depositors and deliver on the promised compensation while protests continue in Asunción. For the country's financial system, they include trust in a bank that brought more than a million people into formal banking for the first time.

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Around Prague, based on reporting by NPR