The drama at Portuguese lender Banco Espirito Santo (BES) resumed on Thursday with a former CEO of the bank being held by police in Lisbon.
Ricardo Salgado was arrested at his home in Cascais, according to local media reports, in connection with "Operation White Mountain", an investigation into alleged tax evasion and money laundering. Salgado is now due at a central criminal court in Lisbon today.
Daily Portuguese newspaper Correio da Manhã reported that the arrest follows on from searches made yesterday at the offices of the Espírito Santo group and is part of Portugal's alleged largest ever network of money laundering.
Reuters news agency confirmed the arrest, adding that Salgado had been taken to the court by representatives of the prosecutor's office. It also said that Salgado had previously been a voluntary witness in the case.
BES' parent company, Espirito Santo International (ESI), has been at the center of investor concerns in Portugal, after an audit by the country's central bank in May showed "irregularities" in its accounts.
The flames were fanned once again in July when debt repayments to clients on commercial paper issued by ESI were delayed. Shares in another part of the conglomerate, Espirito Santo Financial Group (ESFG), were temporarily suspended on the news, after it cited "material difficulties" at ESI.
The problems at the bank, which in terms of assets is relatively small compared to the super-sized banks in the U.K, and the U.S., managed to send tremors around the globe. Portuguese sovereign yields crept higher in early July along government debt from Greece, Spain and Italy.
Shares of BES were up 5 percent in mid-morning trade on Thursday after opening the session nearly 8 percent higher.