The former head of Portugal's largest listed bank by assets, Banco Espirito Santo (BES), has been arrested as part of an investigation into money laundering and tax evasion.
Ricardo Espírito Santo Salgado, also the head of the Portuguese business dynasty which founded the institution, has been detained by Portuguese police and has already appeared in front of a Lisbon court.
Despite Portugal's recent exit from its tripartite bailout programme, fears have abound over the health of one of its largest lenders for months and the arrest compounds a disastrous few weeks for Salgado's family empire, the Espírito Santo group.
BES was wrested from the family's ownership following a €1bn share issue in June, which led to an independent management team taking over. Concerns over its exposure to the wider group are widespread, with the research division of Citigroup estimating that it could require a capital injection of up to €1.8bn.
BES shares dropped by 60% over the past month, before being propped up by Goldman Sachs and an American hedge fund, David E. Shaw, ahead of today's latest scandal.
On Wednesday, a holding company under the Espírito Santo umbrella applied for creditor protection after failing to meet €897m worth of debt repayments to Portugal Telecom.
Salgado's arrest comes on the same day that the chief of one of Portugal's primary market regulators, CMVM, told a parliamentary committee that the Espírito Santo group had been investigated on numerous occasions in recent years and that the watchdog had found "signs of abuse of insider information and possible crime of confidence abuse".
Earlier this month, the Portuguese the CMVM and the UK's Financial Conduct Authority imposed a one-day ban on the short selling of shares in troubled BES to protect its market capitalisation and prevent instability spreading to the wider banking sector.
On 24 July, authorities would only confirm that Salgado, 70, has been held in connection with a long-running money laundering and tax evasion probe, before which he had appeared as a voluntary witness in 2013.
The so-called 'Monte Branco' investigation was launched in 2011 and is reported to be scrutinising a banking network between wealth managers in Switzerland and customers in Portugal.