Hreidar Mar Sigurdsson faces allegations related to embezzlement, various breaches of banking laws and trading irregularities.
According to prosecutor Olafur Hauksson, the charge sheet against the former head of Kaupthing also accuses him of being involved in market manipulation and falsifying documents.
Mr Sigurdsson is set to have a bail hearing in Reykjavik District Court today (May 7th 2010).
It is the first high-profile arrest made by authorities after Mr Hauksson was appointed by the Icelandic government to look into whether there was any criminal activity taking place in the months and years before the country's economy was crippled by the collapse of the banking system.
Last month, a report into the country's financial crisis by a truth commission accused banking chiefs in Iceland of "extreme negligence" in allowing its three main banks to fail.
By Claire Archer