The trader was taken in for questioning on Wednesday morning, according to a judicial official not authorised to discuss the arrest and so who spoke on condition of anonymity.

Caisse d'Epargne's top three executives quit after the losses came to light on Oct 17.

A Caisse d'Epargne spokesman, Jean-Baptiste Froville, said the bank now calculates the loss was larger than the 600 million euros it initially announced. Mr Froville declined to provide a new estimate, although the prosecutor's office has mentioned the loss would amount to 751 million euros.

Paris prosecutors are investigating whether there are grounds for a possible legal case of breach of trust.

French Finance Minister Christine Lagarde said last week that an initial investigation discovered 'serious holes' in the bank's system of controls.

Citing a preliminary report by France's banking commission, she said the losses came in complex trades far removed from the bank's core business.

The bank's own internal investigation found a large number of breakdowns in internal controls and said alerts had been disregarded, French news magazine Nouvel Observateur reported on its website on Wednesday, citing a copy of the investigator's report that the magazine said it had obtained.

The losses drew comparisons with the much larger trading scandal suffered by another French bank, Societe Generale, earlier this year. Societe Generale took a 4.9 billion euros hit closing what it says were unauthorised positions by former trader Jerome Kerviel. -- AP