Paraguay's president placed under house arrest after impeachment amid banking crisis

Paraguay's Congress on Friday impeached rightwing President Santiago Peña, and within minutes he was placed under house arrest. He is under investigation over claims that he used his political influence to favour Ueno, a bank that was suspended this week after irregularities were found. The suspension left more than half of the country's population without access to their money.

Frozen accounts and protests

Ueno's suspension froze the accounts of 2.9 million people, roughly 60% of Paraguay's adult population. Overnight they could no longer use their own money, even for basics such as bread and water. Protests spread nationwide, and some turned into violent clashes with police. Retail sales fell by as much as 80%, and Peña lost the backing of his own party.

Impeachment proceedings began on Wednesday and finished on Friday. Vice-president Pedro Alliana was sworn in as the new head of state. Prosecutor Elena Fiore Franco told local media that Peña was at home, had voluntarily let officers in and had made himself available for all procedural purposes.

Suspicions and links to the bank

Prosecutors opened an investigation into Peña on Thursday on suspicion of illicit enrichment, money laundering and influence peddling. That day he tried to resign in order to keep the special jurisdiction given to former presidents, who become senators for life in Paraguay. Lawmakers rejected the resignation, so he remains subject to the ordinary courts.

After taking office, Peña appointed Carlos Carvallo Spalding, a former CEO of Ueno, as head of the central bank. Three months later Spalding allowed Ueno to become a digital bank, and within a few years it became one of the country's largest by deposits. The arrest warrant also covers Spalding. Peña himself held shares worth about US$1m in a company that became Ueno Holding in 2022; he sold them in April 2025 and has said he bought them purely as an investor.

An estimated $800m to $860m in state and pension funds was invested in Ueno. Opposition senator Rafael Filizzola described the affair as one of the biggest corruption scandals since the return of democracy.