Pedro Alliana sworn in as Paraguay's new president as former president Pena is arrested

Pedro Alliana has been sworn in as Paraguay's new president, following a dramatic change of power driven by a banking scandal. Alliana took the oath of office on Friday as the country's 53rd president. On the same day, his predecessor Santiago Pena was removed from office by a vote in the Senate, and within hours prosecutors moved to have him arrested.

Alliana, 52, had served as vice president under Pena since the start of Pena's term in 2023. With Friday's swearing-in, he now holds the country's highest executive office.

In the Senate on Friday, 44 senators voted to remove Pena from office. One member of the 45-member chamber abstained. A day earlier, on Thursday, the Chamber of Deputies had voted 78 to zero to impeach Pena. The chamber, however, declined to open impeachment hearings against Alliana.

In a message on social media, Pena wrote that he was taking his leave with gratitude, while fully acknowledging the anguish of those who are currently awaiting answers.

Behind Pena's rapid fall is the collapse of Ueno Bank, a popular lender. On Tuesday, 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. The central bank then seized the lender and transferred its remaining assets to other banking institutions.

The collapse hit ordinary customers hardest. With roughly 3 million members, Ueno counted nearly two thirds of Paraguay's adults among its customers, and they abruptly lost access to their accounts and pension payments.

Ueno had grown rapidly in recent years, consolidating in 2023 under the Ueno brand. It had become Paraguay's fifth largest bank by deposits. Some $800m in public money had fuelled its growth. The bank claimed that more than a million Paraguayans had opened their first bank account with the firm.

Questions have also been raised about Pena's connection to the bank. In 2023, he was identified as a shareholder of Ueno's parent company, though he claimed to have sold his shares in early 2025. Investigators are now examining whether government institutions properly regulated the bank and whether Pena himself had conflicts of interest involving it.

As the crisis deepened, Pena offered to step down, citing the need to preserve the country's democratic institutions. But on Thursday, Congress rejected his resignation and instead proceeded with his impeachment. Had he 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.

Pena's party, the Colorado Party, backed the impeachment. The party has largely dominated Paraguayan politics since 1948. Former president and party leader Horacio Cartes wrote in a statement that they support the impeachment of the president of the republic, Santiago Pena, in order to restore the republic's institutions.

After the impeachment, prosecutors announced they would seek Pena's 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.

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. In a statement, he wrote that he did not wish for his presence to be a source of greater division or instability, and that it was his responsibility to place the country above his own personal fate. Earlier in the day, he had asked for more time in the Senate hearing, saying the time allotted was clearly insufficient to exercise his constitutional right to a defence.

The newly inaugurated president began his political career as the governor of his home department, Neembucu, in Paraguay's south. 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. Returning the frozen savings of millions of customers and advancing the investigation are now the two biggest challenges before the new administration.