Police in Portugal have detained the former head of of the private bank BPN, which the government nationalised earlier this month, for questioning over alleged money laundering and fraud.
According to Portuguse officials BPN had estimated losses of some 700 million euros, but many analysts put the figure at double that.
Jose Oliveria e Costa, whose bank’s problems began before the recent crisis, has been questioned by a judge and spent the night in custody. Police also searched his various homes.
The bank has been in trouble for some time and the recent financial turbulance exacerbated the problems and forced the government to step in.
Portugal’s banks have managed to avoid the worst of the downturn as they held no toxic US subprime assets and have relatively conservative lending policies.