Paraguay Congress Moves to Impeach Peña After Bank Failure

Paraguay's lower chamber convened an extraordinary session on Thursday to weigh removing President Santiago Peña, coming 48 hours after the central bank took control of Ueno Bank, among the country's biggest lenders.

Political tensions rose in the hours before the session. In a statement on X, Horacio Cartes — the Colorado Party's leader, a former president (2013 to 2018) and Peña's mentor — announced the party's backing for impeachment proceedings against Peña.

La bandera colorada representa una historia de servicio al país; honrarla también significa actuar con valentía cuando la patria lo exige.

“We support the impeachment trial of the President of the Republic, Santiago Peña, in order to put the Republic’s institutions back on track,” Cartes wrote.

From Bank Failure to Impeachment

Ueno was ordered into intervention and liquidation by Paraguay's Central Bank (BCP) on Tuesday after its solvency ratio fell below half the required minimum. At the time, the lender served 2.9 million clients in a nation of 6.1 million people.

The freeze also affected state funds. Roughly $380 million belonging to the Social Security Institute (IPS) was locked by the decision, including deposits tied to about 32,000 retirees, as were resources from state power utility ANDE and the binational Itaipú dam.

On Wednesday, legislators from the opposition and dissidents within the ruling party filed an impeachment request against Peña and Vice President Pedro Alliana under Article 225 of Paraguay's Constitution. The measure carried 35 signatures and alleges poor performance of duties, along with a possible conflict of interest and growth in Peña's personal assets.

“Two out of every three Paraguayans can’t use their money today, and the main person responsible is Santiago Peña. Even his allies know that,” independent deputy Raúl Rubín told reporters.

Peña’s Ties to the Bank

According to local press reports, Peña once held shares in Ueno Holding and sold them in April 2025. He has maintained that he had no connection to the bank itself.

The central bank's leadership drew criticism too. Before becoming BCP president in 2023, Carlos Carvallo had chaired Financiera Ueno, the bank's predecessor. He has said he is resigning, and Peña has asked Congress to confirm Raúl Vera Bogado in his place.

Separately, police took eight Ueno executives into custody, including CEO Miguel Vázquez and chairman Juan Manuel Gustale, in a case that involves breach of trust, misconduct during a crisis and fraud.

What Depositors Can Expect

Paraguay's deposit-guarantee scheme gives individuals coverage of up to 75 monthly minimum wages — about 228.3 million guaraníes, or roughly $38,622.

Peña said an emergency law would cover 98% of the bank's depositors and that payouts would begin this week. The BCP has published an official page where depositors can check their payments.

“I earnestly ask all political sectors to put the interests of savers ahead of any other interest,” Peña said in an address on Wednesday.

What Happens Next

Impeachment under the Constitution requires a two-thirds vote in the Chamber of Deputies before the case goes to the Senate, which serves as the court. A two-thirds majority in the Senate is also needed for removal — meaning at least 30 of the 45 senators.

The fallout reaches beyond Peña. Dissident Colorado deputy Mauricio Espínola warned that if Peña remains in office, the party has very little chance of keeping power in the 2028 presidential election.

For savers in Latin America, the episode adds to a long list of reasons to view local banks with suspicion.