Paraguay’s Ousted President Santiago Peña Charged and Jailed Over Ueno Bank Collapse

Paraguay’s former president Santiago Peña has been charged with crimes linked to the collapse of a digital bank, and a judge has ordered him held in detention while prosecutors investigate. It is a dramatic fall for a man who was president until two days ago.

Peña, 47, was brought before prosecutors in the capital, Asunción, on Saturday, 7 November 2026. He was charged with breach of trust and administration for personal gain — in plain language, abusing a position of trust and managing public money for his own benefit. After a hearing, Judge Humberto Otazu ordered him held in pre-trial detention at the Presidential Escort Regiment headquarters, a military facility in Asunción, rather than a normal prison.

The judge said the detention was necessary to make sure Peña stays in the country while the case goes ahead. Peña’s lawyer, Ricardo Preda, told reporters that his client pleads not guilty.

What happened on Saturday

The day moved fast. Peña arrived at the Attorney General’s Office in Asunción on Saturday morning to appear before prosecutors, a day after he was removed from office. Prosecutors charged him and asked the court to hold him in custody until his trial.

The hearing took place before Judge Otazu. After hearing both sides, the judge ordered Peña into pre-trial detention and froze the assets of both men. Pre-trial detention means a person is held in custody while the investigation continues — it is not a finding of guilt.

Peña’s lawyer said his client would plead not guilty. Peña himself has argued from the start that the bank’s problems were a matter for the regulators, not a crime, and that he did nothing wrong.

The decision to hold a former president in a military facility rather than an ordinary prison drew attention in Paraguay. The Presidential Escort Regiment headquarters is the base of the military unit that guards the president.

What Peña is accused of

Prosecutors say Peña used his position as president to steer large amounts of public money into Ueno, the digital bank at the centre of the crisis, and to protect the bank from proper oversight while its finances were getting worse.

The accusations, as reported by Al Jazeera and Reuters, include:

• Directing public money into Ueno. Prosecutors say Peña used his political influence to get government agencies and state-owned bodies to keep hundreds of millions of dollars of public funds deposited in Ueno, even as concerns grew about the bank’s risky lending.
• Shielding the bank from scrutiny. They say he helped protect Ueno from regulatory checks as its lending practices came under question.
• Appointing a bank insider to run the central bank. In 2023, Peña named Carlos Carvallo — a former executive at the company that later became Ueno Bank — to head the Central Bank of Paraguay, the very agency responsible for supervising the lender.
• Breaking the rules on pension money. Prosecutors say Peña allowed Paraguay’s state pension fund to deposit $355 million at Ueno, above the legal limit for such deposits.

At the heart of the case is a conflict of interest. Peña held shares in Grupo Vázquez, the business group that controls Ueno, until March 2025 — well into his presidency, which began in 2023.

Peña has denied all of it, saying the bank’s failure was a regulatory matter, not something he caused or covered up.

The bank at the centre of the crisis

To understand why this case matters so much, it helps to know how big Ueno had become — and how fast.

Ueno started as a small financial technology company. In less than five years it became a household name in Paraguay. It won a banking licence in 2023 and grew quickly, winning customers with generous cash-back offers on groceries, opening more than 70 branches, sponsoring the national football team, and putting its name on the country’s main stadium.

By the time it collapsed, Ueno had about 3 million customers in a country of only 6.5 million people — more than 60 percent of Paraguay’s adults, according to the Associated Press. For many Paraguayans, Ueno was where their salary arrived, where their pension was paid, and where their savings sat.

Public money was at stake too. Ueno held roughly $800 million in public deposits, including state pension and health funds. That is the money prosecutors say Peña helped direct into the bank.

The trouble was how the bank was lending that money. In June, inspectors from the central bank found a pattern of risky lending to insiders, according to ABC Color, a leading Paraguayan newspaper. Ueno had lent large sums to companies tied to its own owners, beyond what the law allows, and without enough collateral — assets pledged as security — to cover the debts if they went bad.

The end came quickly. On Monday, 2 November, regulators investigating Ueno’s loans found poorly documented lending and expenses the bank had wrongly counted as assets. Once the books were corrected, Ueno’s capital — the cushion of its own money a bank must keep to absorb losses — had fallen to less than half of the legal minimum.

The central bank’s board voted late on Monday to place Ueno in “resolution” — in simple terms, to take it over. Officials took control on Tuesday, 3 November. The bank’s app, cards and transfers went dark, and its branches locked their doors. Desperate depositors lined up outside, unable to withdraw cash or pay for food.

The panic spread. On Wednesday, a rush to open new accounts at other banks crashed their mobile apps, adding to the fear. The fallout also claimed the central bank’s chief, who resigned on Tuesday, and prosecutors issued arrest warrants for eight Ueno executives, who later turned themselves in.

On Thursday, a judge ordered six Ueno executives jailed pending trial, including the bank’s founder, Miguel Vázquez, and the bank’s president, Juan Manuel Gustale. Two others were placed under house arrest. Prosecutors have charged 27 bank officials and business associates with breach of trust and attempted fraud, alleging that Ueno made large loans to related companies without adequate guarantees and diverted some of the money to other businesses in the group.

How a bank collapse brought down a president

The political fallout was just as fast as the financial one. As the scale of the crisis became clear, protests filled the streets of Asunción. On Wednesday, thousands marched on Congress. “Santiago Peña and the Colorado Party have stolen all our savings,” said Luis Pineda, one of the protesters. The crowds shouted “We want your head, Peña!” and carried signs calling him “the enemy of savers” and pleading “Give us back our money.” Riot police fired pepper spray and rubber bullets to push them back.

Peña announced his resignation in a video on Thursday, 5 November, after the collapse cost him the support of his own Colorado Party. But Congress did not accept it — lawmakers impeached him instead, and the Senate completed his removal from office on Friday, stripping him of the legal immunity that comes with the presidency and clearing the way for criminal charges.

Vice President Pedro Alliana was sworn in as president on Friday, 6 November 2026. Alliana, who was elected on the same ticket in 2023, is a senior figure in the Colorado Party. He previously served as president of the Chamber of Deputies, the lower house of Congress, and as governor of Ñeembucú, a department in southern Paraguay. He will serve out the rest of Peña’s term, which ends in August 2028. Because the vacancy came in the final two years of the five-year term, no new election is required.

Alliana’s own position is not entirely clean. He is himself under investigation in connection with the bank’s collapse.

Many protesters said Peña’s departure alone would change nothing. They want the impeachment process to finish so that he loses the legal immunity of the presidency for good, and they want their money back.

What happens to savers’ money

For the millions of people locked out of their accounts, the most urgent question is simple: when will they get their money back?

Congress rushed a law through on Wednesday to answer it. Under the law, a state guarantee fund must repay stranded depositors within five business days. Repayments were due to start on Thursday with small accounts, for customers who owe nothing to Ueno. The fund insures up to about $36,000 per customer.

The central bank has also begun a process to transfer Ueno’s deposits and recoverable assets to other banks, before liquidating what remains of the lender. In other words, healthy parts of the bank are being moved to safer hands, and the rest will be sold off.

Even so, trust has been badly damaged. Paraguay’s currency, the guaraní, fell nearly 4 percent against the US dollar on Thursday, bringing its losses for the week to nearly 7 percent, according to central bank exchange-rate data.

The Labor Ministry estimates that the collapse has affected about 7,000 direct and indirect jobs at the bank and its related businesses.

What happens next

Several things still need to happen, and each of them will shape how this crisis ends.

First, the criminal cases will move forward. Prosecutors have charged 27 people in connection with Ueno, and now the former president and the former central bank chief have been charged too. The courts will decide whether the lending at Ueno was a crime or simply bad banking — and whether Peña personally broke the law. Peña has not been convicted of anything. He denies the charges, and his trial has not yet begun.

Second, Congress must choose a new vice president. Alliana was sworn in as president on Friday, but the political transition is still unfinished.

Third, the fate of the frozen deposits will be the test that matters most to ordinary Paraguayans. The guarantee fund has promised to start repaying small accounts within five business days, and millions of people will be watching to see whether that promise is kept. If repayments stall, the protests are likely to return.

Fourth, the wider questions about regulation will not go away. How did a bank holding the salaries and pensions of half a country grow so fast with so little oversight? Why did the central bank, run by a former Ueno executive, not act sooner? Those questions will be asked in Congress, in court, and in the press for months to come.

Why it matters beyond Paraguay

Paraguay is a small country, but the fall of its president matters for the region. The country had worked hard to build a reputation as a stable place for foreign investment, especially for money from neighbouring Brazil. That reputation is now damaged.

The crisis has also shown how quickly a banking failure can become a political crisis when the people in charge of supervising the bank are linked to the people who own it. Only Venezuela ranks worse than Paraguay in South America on Transparency International’s latest index of perceived corruption.

There is also a warning in the story for the rest of Latin America, where digital banks are growing fast and reaching millions of people who never had a bank account before. Fast growth is not the same as safe banking. When a bank holds the salaries and pensions of half a country, the people watching over it must be truly independent — and the rules must be enforced before the money runs out, not after.

Frequently asked questions

Who is Santiago Peña?

Santiago Peña, 47, was the president of Paraguay from 2023 until the Senate removed him from office on 6 November 2026. He was the country’s youngest-ever president. He was charged on 7 November 2026 over his alleged role in the collapse of Ueno Bank.

What is Peña charged with?

Breach of trust and administration for personal gain. Prosecutors say he used his influence to direct public money into Ueno Bank and shielded it from oversight, while holding shares in the bank’s parent company until March 2025. He pleads not guilty, and each charge could carry up to 10 years in prison.

What happened to Ueno Bank?

Paraguay’s central bank took over Ueno on 3 November 2026 after finding that its capital had fallen to less than half of the legal minimum. Regulators found poorly documented loans to companies linked to the bank’s owners. The bank’s app, cards and transfers stopped working, and about 3 million customers were locked out of their accounts.

Will savers get their money back?

A state guarantee fund must repay stranded depositors within five business days, starting with small accounts. The fund insures up to about $36,000 per customer.

Who will replace Peña as president?

Vice President Pedro Alliana was sworn in as president on Friday, 6 November 2026, and will serve out the rest of the term, which ends in August 2028. Congress must still choose a new vice president.

Has anyone else been charged?

Yes. Former central bank chief Carlos Carvallo faces the same charges as Peña, plus falsifying government documents, and has also been ordered into pre-trial detention. Prosecutors have charged 27 bank officials and business associates in total, and six Ueno executives, including founder Miguel Vázquez, were jailed pending trial.

Sources

• Al Jazeera, “Paraguay’s ousted president charged over banking scandal”, 7 November 2026: https://www.aljazeera.com/amp/economy/2026/11/7/paraguays-ousted-president-charged-over-banking-scandal
• Reuters, “Paraguay prosecutors charge ex-President Peña, seek pretrial detention”, 7 November 2026: https://duke.fm/2026/11/07/paraguays-ex-president-pena-faces-prosecutors-after-impeachment-house-arrest/
• Rappler, “Judge orders Paraguay’s ex-president Peña held before trial”, 8 November 2026: https://www.rappler.com/world/latin-america/paraguay-santiago-pena-ordered-detained/
• Malay Mail, “Ousted Paraguay ex-president charged, detained over bank collapse”, 8 November 2026: https://www.malaymail.com/news/world/2026/11/08/ousted-paraguay-ex-president-charged-detained-over-bank-collapse/242453
• Kuwait Times, “Impeached Paraguay leader charged over shock collapse of bank”, 8 November 2026: https://kuwaittimes.com/article/53221/world/impeached-paraguay-leader-charged-over-shock-collapse-of-bank/amp/

This article is for general information and education only. It is not legal or financial advice.