Banking collapse in Paraguay: Peña under house arrest, Ayala as new president
Former president Santiago Peña was placed under house arrest following his removal by the Senate. Nearly three million Ueno depositors were left without access to their funds.
Peña's removal and Ayala's swearing-in amid banking chaos
Paraguay's parliament swore in a new president on Friday, Pedro Ayala, 52, who until then had held the office of vice-president. His predecessor, Santiago Peña, had been removed hours earlier by the Senate and placed under house arrest, according to the prosecutor's office. All of this, as Philenews reports, unfolded within days of a banking crisis explosion that paralysed millions of citizens.
In his first speech following his swearing-in, Ayala pledged that "fellow citizens experiencing such a difficult situation because of the financial chaos will be fully compensated". "We will not leave them alone," he said characteristically.
The collapse of Ueno
The crisis began in the early hours of Tuesday, when Ueno Bank was placed under the control of the country's central bank (BCP) and under liquidation. Ueno had been founded only in 2021, but expanded at rapid rates in the following years. The BCP's intervention froze deposits, bank cards and other resources of nearly three million customers — a figure corresponding to approximately half the total population and the vast majority of the country's adult population.
Companies, institutions and pension funds found themselves without access to their capital. The banking crisis quickly transformed into a deep political crisis that led to the removal of the president.
Unanimous removal and charges
The Senate determined unanimously that Peña, 47, an economist and staunch ally of the United States, was guilty of "poor performance of his duties" in relation to Ueno's collapse. Senators accused him of "permitting", "tolerating" and "failing to correct" the "misappropriation" of pension funds by a bank connected to the presidential circle. Senator Adrián Vaesken raised the matter in a way that the majority accepted: Peña "subordinated the public interest to private interests".
Senators also highlighted that Peña, even during his term until 2025, held shares in the holding company to which Ueno Bank belongs.
The former president did not attend the proceedings. His lawyers challenged their validity, arguing that parliament "did not have the jurisdiction to try someone who resigned from office", according to lawyer Ricardo Preda. Peña had announced his resignation on Thursday — parliament, however, did not accept it, thus making referral and trial before the Senate inevitable. Had the resignation been accepted, Peña would have acquired lifetime senatorial status — and parliamentary immunity — as the constitution stipulates for former presidents.
Less than an hour passed from his removal before he was placed under house arrest. Prosecutor Silvia Margarita González Vester announced to journalists that Peña was to be taken to the prosecutor's office, where he is expected to be charged with breach of trust, undue exercise of influence in exchange for consideration, and abuse of public office for personal purposes.
Protesters outside parliament and central bank
Several hundred citizens had gathered outside the national representation in Asunción and welcomed news of the removal with cries of joy, slogans and songs.
"Finally Santiago Peña is gone, finally justice has been served!" Jessica Acuño, 32, a clerk, told the French Press Agency. "Now we want them to give us our money back and put him in jail!", she added.
Jonathan Riverola, a 24-year-old student whose family is affected by the crisis, welcomed the removal but pointed out that "we are not satisfied", as his successor is Ayala, who belongs to the same right-wing Colorado Party, which has dominated the Paraguayan political scene for decades. Ayala himself, moreover, has been accused of bearing responsibility for the banking crisis — parliament, however, voted against his removal.
Separate demonstrations took place outside the central bank building, where gathered citizens shouted "we want our money back".
First compensation and international repercussions
The BCP announced that the return of funds to eligible parties had begun. "The process of disbursement of prepaid guaranteed amounts to depositors began on Thursday", José Maciel, director of the deposit guarantee fund, told AFP. The first disbursements concern depositors with savings between 1 and 10 million guaraní, that is, 160 to 1,600 US dollars. According to Peña's lawyer, approximately 700,000 Paraguayans received the first payments.
The crisis has already had international repercussions. In Argentina, approximately one thousand employees of technology company ITTI — the same group as Ueno — were placed on standby without pay for 30 days. The South American football confederation CONMEBOL had approximately 13 million dollars saved in the bank, according to an AFP source within the institution. A source from the Brazilian government — Paraguay's largest trading partner — told Reuters that Brasília is seeking to avoid sociopolitical instability and to resolve the crisis without wider repercussions.
Source: Philenews