Paraguay Raids Ex-President’s Home Amid Ueno Bank Collapse

Paraguayan authorities have raided the residence of ousted President Santiago Pena as part of an expanding criminal investigation into the dramatic collapse of Ueno Bank. The downfall of the digital lender has plunged the South American nation into its deepest economic and political crisis in recent years, affecting millions and triggering widespread protests across the country.

Pena, who came to power in 2023, was removed from office on Friday after the digital lender's failure froze access to the savings of nearly three million customers, representing almost half of Paraguay's population. Following a unanimous vote by the Senate to strip him of power and reject his resignation, Pena was arrested and ordered into pretrial detention by Judge Humberto Otazu at a military facility.

Prosecutors have charged Pena with breach of trust and administration for personal gain, offences that carry potential prison sentences of up to 10 years. Investigators allege that while serving as president, Pena used his political influence to channel substantial amounts of public money into Ueno Bank despite possessing financial ties to its parent company. By June, the bank held approximately $850m in public funds, including state pension money.

The former president has denied any wrongdoing, maintaining that the lender's difficulties were merely a regulatory matter. His defense attorney, Ricardo Preda, stated that Pena would plead not guilty and fully cooperate with investigators. Meanwhile, Vice President Pedro Alliana has been sworn in to complete the remainder of the presidential term until August 2028.

Santiago Pena faces criminal charges and pretrial detention following the collapse of Ueno Bank.

Government Response and Bank Solvency

President Alliana announced that the government has successfully refunded 1.2 million Ueno Bank customers whose funds were frozen. Approximately $158m has been paid out so far, with additional reimbursements scheduled. The central bank intervened after discovering that Ueno had breached minimum solvency requirements, holding $146m in questionable loans linked to its owners and suffering a capital drop below legal minimums. Former Central Bank chief Carlos Carvallo has also been charged and jailed in connection with the scandal.

Why it matters

The crisis surrounding the ueno bank collapse has disrupted access to savings, wages, and pensions for nearly three million Paraguayans, shaking public trust in national financial institutions. The removal of the president and subsequent government interventions mark a major political turning point for the nation as authorities attempt to stabilize the economy and restore public funds.