Paraguay’s Santiago Pena under arrest, new president Pedro Alliana sworn in

Pedro Alliana has been sworn in as the new president of Paraguay, after a banking scandal led to the impeachment of his predecessor, Santiago Pena.

On Friday, Alliana, 52, took the oath of office to become the South American country's 53rd president.

Previously, Alliana had served as vice president under Pena since the start of the latter's term in 2023.

But Pena's tenure came to an abrupt end earlier in the day, after 44 of Paraguay's senators voted to remove him from office. One senator in the 45-member chamber abstained.

"I take my leave with gratitude, while fully acknowledging the anguish of those who are currently awaiting answers," Pena wrote on social media on Friday afternoon.

The impeachment marked a rapid fall from power for Pena, a member of the long-governing Colorado Party. His departure coincides this week with the sudden collapse of a prominent lending institution, Ueno Bank.

Questions have arisen about whether the bank was properly regulated by government institutions, and whether Pena himself had conflicts of interests involving the bank.

After Pena's impeachment, prosecutors announced they would seek his arrest on suspicion of breaching the public trust and other crimes. The former president was reportedly detained at his home.

An arrest warrant was also issued for Carlos Carvallo, the former head of Paraguay's central bank, which has been accused of failing in its oversight duties. Carvallo resigned earlier this week.

The scandal erupted early on Tuesday, when the central bank announced that Ueno had fallen below the legal standards for solvency, meaning it did not have enough collateral to cover its loans and other ventures.

It seized the lender, transferring its remaining assets to other banking institutions as a safeguard.

Millions of Ueno clients, however, abruptly lost access to their accounts and pension payments as a result of the crisis.

With roughly 3 million members, the bank counted nearly two thirds of Paraguay's adults among its customers.

The company had rocketed to prominence in recent years, consolidating in 2023 under the brand Ueno — sometimes stylised with lowercase letters as "ueno". It had grown to be Paraguay's fifth largest bank by deposits, with $800m in public money fuelling its growth.

Prior to its collapse, Ueno claimed that more than a million Paraguayans had opened their first bank account with the firm.

In 2023, Pena was identified as a shareholder of Ueno's parent company, though he claimed to have sold his shares in early 2025.

Following the collapse of the lender, Pena offered to step down, citing the "the need to preserve our democratic institutions".

But on Thursday, Paraguay's Congress rejected his resignation and instead proceeded with his impeachment.

Pena's conservative political movement, the Colorado Party, was among the groups in favour of the manoeuvre. The party has largely dominated Paraguayan politics since 1948.

"We support the impeachment of the president of the republic, Santiago Pena, in order to restore the republic's institutions," Horacio Cartes, a former president and party leader, wrote in a statement.

Had Pena been allowed to resign, he would have retained the right of former presidents to become a member of the Senate, with legal protections from prosecution.

In Thursday's hearing, the Chamber of Deputies voted 78 to zero to impeach Pena, allowing for the Senate to remove him from office the following day.

It declined, however, to open impeachment hearings against Alliana.

The newly inaugurated president began his political career as the governor of his home department, Neembucu, in Paraguay's south, and he served nearly a decade in the Chamber of Deputies, including three years as its president.

Alliana assumes the leadership of Paraguay at a time when it is facing one of its most severe political and economic scandals in recent history.

Prosecutors have questioned whether Ueno was shielded from accountability due to its government connections. Some $355m in state pension funds were invested in the bank.

At least 27 people are facing criminal charges in relation to the scandal, including lead shareholder Miguel Vazquez.

Among the crimes being investigated are attempted fraud, breach of trust, misappropriation of funds and influence peddling.

Pena has signalled he plans to cooperate with the investigation, though he did not appear at the impeachment hearings personally on Friday, sending his lawyers in his stead.

"I do not wish for my presence to be a source of greater division or instability. It is my responsibility to place the country above my own personal fate," he wrote in a statement.