The former chairman of Co-operative Bank, Paul Flowers, has been arrested in connection with a probe into the supplying of drugs, British police said on Friday.
Flowers, a 63-year-old Methodist minister, was filmed allegedly talking about buying crystal meth, crack cocaine and ketamine by the Mail on Sunday newspaper.
The former local councillor for the opposition Labour party apologised after the story was published on Sunday and was subsequently suspended by the church and his party.
"Officers from West Yorkshire police arrested a 63-year-old man in the Merseyside area in connection with an ongoing drug supply investigation," the force said.
"He has been taken to a police station in West Yorkshire where detectives will continue their enquiries."
Flowers quit as chairman of the Co-operative Bank, which prides itself on ethical investments, in June.
But the scandal further damages the bank's reputation just weeks after it was forced to hand control to US hedge funds to plug a £1.5-billion ($2.4-billion, 1.8-billion-euro) black hole.