Pedro Alliana becomes Paraguay interim president after Santiago Pena's impeachment over banking crisis

Pedro Alliana took over as Paraguay's president on Friday following the impeachment of his predecessor, Santiago Pena, over a major banking crisis that left nearly half the country's population unable to access their accounts. Senators appointed Alliana, who previously served as vice president, shortly after voting to remove Pena following the chaotic collapse of a bank with which he had links.

Senate President Basilio Nunez declared Pena guilty of poor performance in his duties after 44 of the 45 senators voted in favour of impeachment. One senator was absent. Hundreds of people gathered outside Congress and loudly celebrated Pena's removal from office. "Justice has been done. Now we want him to give us back our money and go to jail," Jessica Aquino, 32, told AFP.

Minutes after his impeachment, Paraguayan authorities placed the former president under house arrest, prosecutor Silvia Margarita Gonzalez Vester told reporters. Alliana pledged that the government would not abandon the nearly three million depositors, including pensioners, affected by Ueno Bank's takeover amid concerns over its insolvency.

"Compatriots who are now going through a difficult time as a result of the financial collapse will be fully compensated," Alliana said. He will remain president until 2028. Opposition lawmakers had also submitted a motion seeking Alliana's impeachment over the crisis, but the proposal failed to secure congressional approval.

Money begins returning to depositors

The collapse of the bank triggered street demonstrations, with thousands demanding accountability from US-backed Pena. Until last year, he held a stake in Grupo Vazquez, the company that controlled Ueno. A Central Bank official told AFP that advance payments to an unspecified number of affected depositors started on Thursday afternoon. Jose Maciel of the Central Bank's Deposit Guarantee Fund said the first phase of payments, amounting to approximately $1,600, would be directed to customers who have no outstanding loans and maintain accounts with another bank or financial institution in Paraguay to receive the money.

The remaining beneficiaries "will be announced progressively over the course of the payment process," he added. Although Pena had offered to resign following the banking crisis, lawmakers continued with impeachment proceedings, resulting in the removal of his political immunity. The opposition accused the US-backed politician of having a conflict of interest, an allegation he denied.

The Attorney General's office confirmed that it was investigating him for acts related to the supervision and resolution of Ueno Bank S.A. and the placement of public funds in said entity. Prosecutor Gonzalez Vester said Pena would be questioned on Saturday over alleged crimes involving breach of trust, influence peddling and misappropriation of funds.

Shortly before his removal, Pena called for national unity in a post on X.

"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 but made no reference to the country's president.

Protests demand Pena's imprisonment

"Pena in prison," read one of the protest signs displayed outside Congress on Friday. Thousands of people had taken to the streets for a third consecutive night on Thursday in Asuncion and other cities, demanding the return of their money. "Santiago Pena 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 during a demonstration in the capital.

Police dispersed the protest using tear gas and water cannons. Ueno initially operated as a small fintech company with a digital-first business model that attracted low-income customers. It subsequently expanded into a major bank, managing state pensions and accounts belonging to several government entities. The scandal has already resulted in the departures of Central Bank President Carlos Carvallo and Interior Minister Enrique Riera. Meanwhile, eight Ueno executives have been arrested.

Police also carried out raids on several locations associated with Grupo Vazquez on Wednesday and Thursday. The crisis also affected neighbouring Argentina, where approximately 1,000 employees of technology company ITTI, part of Grupo Vazquez, were suspended for 30 days without pay.

The fallout extended to football as well. Ueno Bank sponsors several first-division football clubs and Paraguay's national team. "We were also victims of this situation," members of the national team said in a statement posted on X.