# Paraguay Jails Ousted President Peña as Ueno Bank Collapse Leaves Most of the Country Unable to Reach Deposits

Prosecutors charged Peña with instigating a breach of trust, and the Paraguayan side of the Itaipu dam disclosed about $164 million and 115 billion guaraníes held at the failed lender.

- Published: 2026-11-08T05:20:24.935Z
- Canonical: https://polylog.news/2026-11-08/paraguay-jails-ousted-president-pe-a-as-ueno-bank-collapse-l
- Publisher: Polylog (Global desk)
- Section: macro
- Sources: [MercoPress](https://en.mercopress.com/2026/11/08/paraguay-s-prosecutors-charge-santiago-pena-and-seek-his-pre-trial-detention-over-the-ueno-bank-collapse?utm_source=feed&utm_medium=rss&utm_content=main&utm_campaign=rss), [The Hindu](https://www.thehindu.com/news/international/paraguays-ousted-president-charged-with-crimes-linked-to-collapse-of-major-bank/article71680452.ece), [The Guardian](https://www.theguardian.com/world/2026/nov/07/ousted-paraguay-president-under-house-arrest-after-banking-crisis-leaves-60-of-country-unable-to-access-accounts), [Folha (Mercado)](https://c-level.folha.uol.com.br/negocios/2026/11/lado-paraguaio-de-itaipu-mantem-quase-r-1-bilhao-no-ueno-bank.shtml)

A bank failure has removed a sitting president in less than a week. The Central Bank of Paraguay (BCP) took control of Ueno Bank on Nov. 3 over solvency problems. The intervention froze the savings of [nearly three million customers](https://en.mercopress.com/2026/11/08/paraguay-s-prosecutors-charge-santiago-pena-and-seek-his-pre-trial-detention-over-the-ueno-bank-collapse?utm_source=feed&utm_medium=rss&utm_content=main&utm_campaign=rss). The Guardian reports that the crisis left [60% of the country unable to access their accounts](https://www.theguardian.com/world/2026/nov/07/ousted-paraguay-president-under-house-arrest-after-banking-crisis-leaves-60-of-country-unable-to-access-accounts). The Senate removed President Santiago Peña on Friday, and Vice-President Pedro Alliana took over.

On Saturday, prosecutors charged Peña and asked for pretrial detention. Judge Humberto Otazú granted it, [citing flight risk](https://www.eluniversal.com.mx/mundo/juez-ordena-prision-preventiva-para-santiago-pena-por-el-caso-ueno-bank-es-acusado-de-lesion-de-confianza-en-beneficio-propio/). According to Spanish-language reports, prosecutors accuse Peña of [breach of trust as instigator and of administration for personal benefit](https://www.infobae.com/america/agencias/2026/11/07/la-fiscalia-de-paraguay-imputa-al-expresidente-pena-y-pide-prision-provisional-tras-la-caida-del-ueno-bank/). They also charged Carlos Carvallo, a former Ueno executive whom Peña had appointed to run the central bank, and they cite a conflict of interest. Peña was a shareholder of Grupo Vázquez, which owned the bank [until March 2025](https://www.moneylife.in/article/paraguay-banking-crisis-deepens-as-ueno-collapse-triggers-impeachment-bid-against-president/82129.html). His lawyer, Ricardo Preda, rejected the charges. In a farewell message released shortly before his removal, Peña said he hoped [his departure would spare Paraguay further harm](https://www.thehindu.com/news/international/paraguays-ousted-president-charged-with-crimes-linked-to-collapse-of-major-bank/article71680452.ece).

State money is part of the losses. Brazil's Folha reports that the Paraguayan side of Itaipu Binacional, the hydroelectric dam Paraguay shares with Brazil, held [115.2 billion guaraníes and $163.8 million at Ueno](https://c-level.folha.uol.com.br/negocios/2026/11/lado-paraguaio-de-itaipu-mantem-quase-r-1-bilhao-no-ueno-bank.shtml) on the day of the intervention, almost 1 billion reais in total. Itaipu says it has started legal action and is following the central bank's process.

The case follows a familiar pattern. A fast-growing lender gathered public-sector deposits and had friends in the regulator. When it failed, private savers lost access to their money, and the political class that placed public funds in the bank lost office. Protesters outside Congress chanted ["out with them all"](https://en.mercopress.com/2026/11/07/they-all-must-go-pena-s-removal-fails-to-calm-anger-on-paraguay-s-streets?utm_source=feed&utm_medium=rss&utm_content=main&utm_campaign=rss), the slogan of Argentina's 2001 deposit crisis.

## What this means

The losses spread through deposits. Frozen accounts drain cash from households and firms, so savers withdraw from other lenders they believe are politically connected, and some move to dollars or offshore banks. Paraguayan banks, the guaraní, public agencies with deposits at Ueno, and Itaipu's payment flows with Brazil are all exposed. The scale of the freeze is not fully priced: a crisis that reaches most of the population becomes a fiscal problem, because the new government will face pressure to repay depositors with public money. The closest precedent is Argentina's 2001 "corralito" deposit freeze, which brought down the government within weeks and was followed by devaluation. Paraguay's case is smaller and involves one bank, not the whole system. The desk's read is that within weeks the Alliana government will use public funds or a forced sale to release small balances first, which moves the loss onto taxpayers. That depends on contagion staying limited to Ueno. Withdrawal limits or interventions at a second bank would prove this wrong and turn a single-bank failure into a systemic one.

## What to watch

- Whether the central bank announces a timetable for releasing frozen balances, and the amount covered. Fast repayment of small depositors would limit runs on other banks.
- Deposit outflows or withdrawal limits at other Paraguayan lenders with public-sector deposits. Any sign of this would show the crisis spreading beyond Ueno.
- Statements from Brazil's government on Itaipu funds. Itaipu's losses make this a bilateral issue that could affect the dam's tariff negotiations.