News agency Xinhua said local media statements indicate Jose Oliveira e Costa was arrested on Thursday (November 20th).
Mr Costa, who headed up BPN between 1997 and 2008, also faces charges of alleged forgery, abuse of credit and illegal gains, the site said.
On November 21st, he was sentenced to three months of "preventative detention" by the central criminal tribunal in Lisbon in order to prevent any flight risk or potential destruction of incriminating evidence, it added citing local daily Diario de Noticias.
Earlier this month, Xinhua said, the Portuguese government was forced to nationalize BPN in order to prevent its collapse after it was revealed that the bank had lost around â¬700 million ($885 million) because of "bad management and malpractice".
BPN was formed in 1993 by the merger of the banks Soserfin and Norcredito. At the end of 2007, it reported a consolidated net income of â¬56.7 million.