Ousted Paraguay president under house arrest after banking crisis leaves 60% of country unable to access accounts

The impeachment and arrest came as protests spread across Paraguay, some involving violent clashes with police. The crisis began when Ueno Bank was suspended this week after irregularities, freezing accounts of approximately 2.9 million people - about 60% of the country's adult population. Customers suddenly found unable to access their own money even for basic purchases like bread and water.

Peña is being investigated about allegations he used his political influence to favor Ueno Bank, which expanded exponentially under his government. The public prosecutor's office opened an investigation into Peña on Thursday on suspicion of illicit enrichment, money laundering and influence peddling.

Arrest and Succession

Minutes after the impeachment concluded on Friday, Peña was placed under house arrest. His vice-president, Pedro Alliana, was being sworn in as the country's new leader. Prosecutor Elena Fiore Franco confirmed the arrest: "It has been established that he is indeed inside his home. He voluntarily allowed officers to enter and made himself available for all procedural purposes."

Peña, who had tried to resign on Thursday to retain the special jurisdiction afforded to former presidents, was not accepted by lawmakers. The 47-year-old economist had been expected to appear before Congress to present his defense but left that to his lawyers, continuing to post on social media instead.

Bank Expansion and Allegations

The crisis stems from Ueno Bank's rapid expansion under Peña's administration. Shortly after taking office, Peña appointed Carlos Carvallo Spalding, a former CEO of Ueno, to head the country's central bank. Three months later, Spalding allowed Ueno to become a digital bank, which helped it become one of Paraguay's largest banks by deposits in just a few years.

Political analyst Hugo Duarte noted: "Because Ueno had the blessing of the presidency, most of the pension funds close to the government went to deposit their money in the bank." An estimated $800m to $860m in state and pension funds were invested in Ueno. Peña himself held about US$1m in shares he bought in 2019 in a company that would become Ueno Holding in 2022.

Political Fallout

As pressure mounted and retail sales fell by as much as 80% because many Paraguayans couldn't access their money, Peña lost support from his own party. During the impeachment session, opposition senator Rafael Filizzola called it "one of the biggest corruption scandals since the return of democracy" and "the biggest fraud carried out from political power in the democratic era."

Before his arrest, Peña posted on social media: "I say goodbye with gratitude, while fully recognising the anguish of those who are now waiting for answers," referring to former Ueno customers who are unable to access their own money. The arrest warrant for Peña also includes Spalding, who regulated the company he used to run.