Career criminal Michael Wheatley, 55, went missing when he was released on a temporary licence from an open prison, and allegedly robbed a building society in Surrey yesterday.
He and another man, aged 53, were arrested in Tower Hamlets, east London, on suspicion of the armed raid.
Wheatley, who earned his nickname after viciously pistol-whipping victims including a 73-year-old woman, had gone on the run twice in the past and each time staged a series of violent robberies before being caught and re-jailed.
Police said two men, aged 55 and 53, were arrested on suspicion of conspiracy to commit armed robbery. The 55-year-old man was also arrested on suspicion of being "unlawfully at large."