# Paraguay jails former president Santiago Peña before trial over the Ueno Bank collapse

A judge ordered pre-trial detention after the Senate removed Peña, while the central bank has paid about $160 million to roughly 1.2 million insured depositors of a lender with nearly 3 million customers.

- Published: 2026-11-09T05:08:23.120Z
- Canonical: https://polylog.news/2026-11-09/paraguay-jails-former-president-santiago-pe-a-before-trial-o
- Publisher: Polylog (Global desk)
- Section: world
- Sources: [MercoPress (charges)](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), [MercoPress (depositors)](https://en.mercopress.com/2026/11/09/lost-savings-and-broken-trust-life-for-those-hit-by-ueno-bank-s-closure?utm_source=feed&utm_medium=rss&utm_content=main&utm_campaign=rss), [The Japan Times](https://www.japantimes.co.jp/news/2026/11/09/world/politics/bank-collapse-paraguay-president/), [The Hindu](https://www.thehindu.com/news/international/police-raid-home-of-ex-president-of-paraguay/article71681272.ece)

Paraguayan prosecutors [charged former President Santiago Peña](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) on Saturday, one day after the Senate removed him from office, and asked for his pre-trial detention. Judge Humberto Otazú granted the request. He cited the need to ensure that Peña submits to the proceedings, [Euronews reported](https://es.euronews.com/2026/11/08/paraguay-prision-preventiva-santiago-pena-caso-ueno-bank). The charges are breach of trust and administration for personal benefit. Peña's defense denies that he took part in the bank's operations, and Peña declined to testify at the hearing.

Prosecutors accuse Peña of [steering millions in government deposits to Ueno Bank and concealing its financial troubles despite warnings about its loans and solvency](https://www.thehindu.com/news/international/police-raid-home-of-ex-president-of-paraguay/article71681272.ece). Police also raided his home. The Japan Times reported that until March 2025, Peña was [a business partner of the group that owns Ueno](https://www.japantimes.co.jp/news/2026/11/09/world/politics/bank-collapse-paraguay-president/). Peña says he ended that tie when he sold his stake.

For nearly 3 million Paraguayans, November 3 began with a phone message reading ["We cannot display your balance,"](https://en.mercopress.com/2026/11/09/lost-savings-and-broken-trust-life-for-those-hit-by-ueno-bank-s-closure?utm_source=feed&utm_medium=rss&utm_content=main&utm_campaign=rss) after the central bank took over the digital lender for a critical solvency problem and froze its deposits. The deposit guarantee covers up to 228.3 million guaraníes per person, about $36,000. The central bank estimates that this fully covers about 97% of depositors, but insured balances are only about 30% of total deposits, [The Paypers and other outlets reported](https://thepaypers.com/fintech/news/paraguay-central-bank-puts-digital-lender-ueno-bank-into-resolution). About [$380 million in public pension money](https://www.latintimes.com/paraguay-ueno-bank-resolution-political-crisis-600886) is in legal limbo. So far, the central bank has [paid about $160 million to nearly 1.2 million depositors](https://www.arabnews.com/world/ueno-bank-depositors-start-getting-money-back-paraguay-central-bank-official-3010238).

## What this means

The deposit guarantee works for small savers and fails for large balances. About 97% of customers are covered, yet roughly 70% of deposits by value depend on how much the liquidators recover. Pension funds, companies and public agencies hold that exposure. This is the standard pattern when a fast-growing lender relies on state deposits and political ties: the state money arrives first and is repaid last. For businesses that can choose where to bank, the lesson is practical. A local guarantee protects household balances, not operating or treasury balances. The closest precedent is Ecuador's 1999 deposit freeze, which drove savers into dollars and preceded official dollarization in 2000. Paraguay's case is smaller and its currency is not under the same strain. The likelier outcome over the coming months is that large depositors move money to foreign-owned banks and dollar accounts, while Congress passes the payout law. If liquidators recover the pension funds quickly and the guaraní holds steady, the read is wrong.

## What to watch

- How much of the $380 million in pension money the liquidators recover, and when. Fast recovery would limit the loss of trust in public institutions.
- Deposit flows at Paraguay's other banks, especially lenders with state-agency balances. Outflows from smaller domestic banks would show that the run is spreading beyond Ueno.
- Whether courts extend detention requests to former central bank governor Carlos Carvallo. Charging the regulator would show that the case covers supervision failures, not just one politician.