Paraguayan Congress has impeached President Santiago Peña and placed him under house arrest on Friday over a financial crisis that locked millions of citizens out of their bank accounts.

Until last year, Mr Peña was a major shareholder in Ueno Bank’s parent company. The bank’s three million customers have been financially incapacitated and unable to make basic payments since the collapse.

Mr Peña is being investigated for misuse of pension assets and institutional cover-ups as lawmakers alleged a connection between the president and the bank’s collapse. 

The president attempted to resign after hearing that lawmakers had moved to impeach him. 

The Paraguayan Congress rejected his resignation and proceeded with the impeachment which stripped him of his immunity and made his prosecution possible.

His resignation would have automatically made him a senator as is the custom with former Paraguayan presidents. But the impeachment halted it.

Shortly after he was impeached, he was placed under house arrest. Vice president Pedro Alliana was sworn in as the country’s interim leader.

Prosecutor Elena Fiore Franco announced Mr Peña was inside his home in a press briefing outside his residence.

“It has been established that he is indeed inside his home. He voluntarily allowed officers to enter and made himself available for all procedural purposes,” Franco said.