Pedro Alliana sworn in as Paraguay president after Santiago Peña's impeachment and arrest

Paraguay's Vice President Pedro Alliana was sworn in as president on Friday after the Senate voted to impeach and remove his predecessor, Santiago Peña, amid a major banking crisis. Paraguay's new President Pedro Alliana wears the presidential sash after taking the oath of office following the Senate's removal of Santiago Pena over accusations linked to the collapse of Ueno Bank in Asuncion, Paraguay.

(AP Photo/Jorge Saenz)Peña was placed under house arrest shortly after the vote over the collapse of Ueno Bank. All 44 senators present voted in favour of his removal, accusing him of misconduct in office. The crisis began after financial regulators seized Ueno Bank on Tuesday, leaving nearly three million customers unable to access their savings or use their bank cards.

Prosecutors ordered Peña to remain under house arrest until he appears before the economic crimes and anti-corruption unit. The attorney general's office confirmed his detention to The Associated Press. Prosecutors also ordered the arrest of former central bank chief Carlos Carvallo, who was appointed by Peña.

It was not immediately clear whether Carvallo had been taken into custody. Lawmakers accused Peña of using his political influence to direct hundreds of millions of dollars in public funds into Ueno Bank while regulators failed to act on concerns about risky lending to companies linked to the bank's owners.

The impeachment charges also focused on Peña's former stake in Ueno's holding company, which he sold under pressure last year, and his appointment of a former Ueno executive to lead the central bank. Lawmakers further alleged that the state pension fund deposited $355 million at Ueno, exceeding legal limits.

In a farewell message before the Senate vote, he said he hoped his departure would prevent further political instability. "I do not want my presence to be a cause of greater division or instability," he wrote. Vice President Pedro Alliana was sworn in as Paraguay's new president on Friday.

He will serve the remainder of Peña's term, which ends in August 2028. The 52-year-old is a veteran member of the conservative Colorado Party. He previously served as governor of Ñeembucú province in southern Paraguay and as speaker of the lower house of Congress.

Alliana has promised not to "abandon" the millions of customers affected by the crisis. However, Alliana is also facing scrutiny. Prosecutors are investigating him, while lawmakers shelved an opposition attempt to impeach him on Thursday.

Several senior officials in Peña's government, including his interior minister, chief of staff, legal adviser and political adviser, also resigned during the crisis. Ueno Bank grew rapidly to become Paraguay's fifth-largest bank by deposits, with more than $800 million in public funds helping fuel its expansion.

The bank attracted a large customer base through digital banking services and promotional offers. More than two-thirds of Paraguay's adults reportedly signed up for its services. However, concerns over its financial health grew amid allegations of risky lending to companies connected to its owners.