Paraguay’s Santiago Pena under arrest, new president Pedro Alliana sworn in

Alliana, 52, took the oath of office on Friday to become the South American country's 53rd president, stepping into a role defined by a sudden political and economic crisis.

His predecessor, Santiago Pena, was removed from office earlier that day after 44 of 45 senators voted to impeach him, with one senator abstaining.

Pena, a member of the long-governing Colorado Party, was arrested at his home following the impeachment, as prosecutors announced they would seek his arrest on suspicion of breaching public trust.

The former president's political movement, the Colorado Party, was among the groups that supported the impeachment, signalling a rare moment of unity against a sitting leader.

In a statement, party leader Horacio Cartes wrote, "We support the impeachment of the president of the republic, Santiago Pena, in order to restore the republic’s institutions."

Bank collapse triggers impeachment

The political upheaval was precipitated by the sudden collapse of Ueno Bank, a prominent lender that had grown to become Paraguay's fifth largest bank by deposits.

The bank was seized by the central bank on Tuesday after it was found to have fallen below legal standards for solvency, meaning it lacked sufficient collateral to cover its loans.

The crisis left millions of clients abruptly without access to their accounts and pension payments, as the bank held nearly two-thirds of Paraguay's adult population as customers.

The scandal has drawn intense scrutiny, with prosecutors questioning whether Ueno was shielded from accountability due to its government connections.

At least 27 people are facing criminal charges in relation to the scandal, including lead shareholder Miguel Vazquez, who faces allegations of attempted fraud, breach of trust, and misappropriation of funds.

Former president's legal troubles

Pena's tenure was marked by allegations of conflict of interest, as he had been identified as a shareholder of Ueno's parent company in 2023, though he claimed to have sold his shares in early 2025.

The former president had offered to step down in the wake of the bank's collapse, citing the need to preserve democratic institutions.

However, on Thursday, Paraguay's Congress rejected his resignation and instead proceeded with his impeachment, a move that would have otherwise allowed him to retain legal protections as a former president.

Pena signalled he plans to cooperate with the investigation, though he did not appear at the impeachment hearings personally on Friday, sending his lawyers in his stead.

Earlier in the day, however, Pena had signalled displeasure with the fast pace of the Senate impeachment hearing, requesting an extension to exercise his constitutional right to a defence.

New president inherits crisis

Alliana assumes the leadership of Paraguay at a time of one of its most severe political and economic scandals in recent history.

The new president, who previously served as vice president under Pena, began his political career as the governor of his home department, Neembucu, in Paraguay's south.

He served nearly a decade in the Chamber of Deputies, including three years as its president, before being elevated to the vice presidency in 2023.

The Chamber of Deputies voted 78 to zero to impeach Pena on Thursday, allowing the Senate to remove him from office the following day.

The Senate declined to open impeachment hearings against Alliana, who is now tasked with navigating the country through the fallout of the Ueno Bank collapse and the arrest of its former leaders.