Ricardo Salgado, who until last month was the third-gen chief executive at Banco Espirito Santo, has been arrested by officials in Lisbon, Portugal, on charges of money laundering and tax evasion.
The problems surrounding Portugal’s largest listed bank came to light in June when a $1 billion rights offering reduced the Espirito Santo family’s ownership stake from 54% stake to 46%.
The move came off the back of the discovery of accounting irregularities at the bank’s holding company, Luxembourg-based Espírito Santo International, which is also controlled by the Espirito Santo family.
The accusations against Salgado threatened share prices and regulators were forced to suspend trading on two occasions. After 23 years at the helm, he was ousted in early July.
The Espirito Santo family lost control of BES’s Portugal operations once before when it was nationalised by the revolutionary government of 1975 but regained control 16 years later.
Two sources familiar with the situation said the family was considering swapping debt for equity and could ask for more time to repay its balance.