Crisis-hit Paraguay impeaches Peña over bank crisis, replaces him with VP Alliana

Pedro Alliana became president of Paraguay on Friday following the impeachment of his predecessor over a massive banking crisis that locked almost half the country out of their accounts.

Senators appointed Alliana, the former vice-president, shortly after voting to remove Santiago Peña over the chaotic collapse of a bank to which he had links.

Senate President Basilio Nunez declared Pena "guilty of poor performance in his duties" after 44 out of 45 senators voted in favour of impeachment, with one lawmaker absent.

Hundreds of people waiting outside Congress raucously celebrated his impeachment.

"Justice has been done. Now we want him to give us back our money and go to jail," Jessica Aquino, 32, told AFP.

Paraguayan authorities placed the ex-leader under house arrest minutes after his removal, prosecutor Silvia Margarita González Vester told reporters.

Alliana promised not to abandon the almost three million depositors, including pensioners, affected by Ueno Bank's takeover amid insolvency concerns.

"Compatriots who are now going through a difficult time as a result of the financial collapse will be fully compensated," said Alliana, who will serve as president until 2028.

Opposition lawmakers had also filed a motion to impeach Alliana over the crisis, but the request failed to gain congressional approval.

Money trickles back

The bank's demise brought thousands of people onto the streets demanding repercussions for US-backed Peña, who until last year had a stake in Grupo Vázquez, which controlled Ueno.

Advance payments to an unspecified number of impacted depositors began on Thursday afternoon, a Central Bank official told AFP.

The first phase of aid deposits, up to around US$1,600, will go to clients who don't have loans and have an account at another bank or institution in Paraguay to receive the funds, said José Maciel of the Central Bank's Deposit Guarantee Fund.

The next beneficiaries "will be announced progressively over the course of the payment process," he added.

Peña had offered his resignation over the disaster, but lawmakers pressed ahead with impeachment proceedings that have stripped him of political immunity.

The opposition accused the US-backed politician of a conflict of interest, which he denied.

The Attorney General said it was investigating him for "acts related to the supervision and resolution of Ueno Bank SA and the placement of public funds in said entity."

He will be questioned over alleged crimes of breach of trust, influence-peddling and misappropriation of funds on Saturday, prosecutor Gonzaález Vester said.

Peña urged reconciliation in an X post shortly before his removal.

"Today, we must come together as Paraguayans to rebuild our institutions and restore trust," he said.

The US Embassy in Paraguay expressed "its solidarity with the Paraguayan people" on Friday, without mentioning the president.

'Peña in prison'

"Peña in prison," read one of the protest signs outside Congress on Friday.

On Thursday, thousands demonstrated for a third consecutive night in Asunción and other cities to demand the return of their money.

"Santiago Peña has hurt so many Paraguayans, so many families, business owners and small business people, including my own son, who had savings in Ueno Bank," Cynthia Farina told AFP at a protest in the capital that police dispersed with tear gas and water cannons.

Ueno began as a small fintech company with a digital-first model that attracted low-income customers, rapidly becoming a major bank that handled state pensions and the accounts of several state entities.

The scandal has claimed the heads of Central Bank President Carlos Carvallo and Interior Minister Enrique Riera, while eight Ueno executives have been arrested.

Police conducted raids on various locations linked to Grupo Vázquez on Wednesday and Thursday.

Nearby Argentina felt the impact of the crisis as some 1,000 employees of technology company ITTI, which is part of Grupo Vázquez, were suspended for 30 days without pay. 

Football also took a hit.

Ueno Bank sponsors several first division teams as well as the national team. 

"We were also victims of this situation," members of the national team said in a statement on X.