Fitch Ratings has downgraded six sets of Spanish mortgage securities issued by Banco Santander, heightening concerns that the damage from Spain’s property crash is spreading to the country’s strongest lenders.

The loans were 'sliced and diced' and packaged in an identical way to sub-prime mortgage bonds in the US, belying claims by the Spanish government that the country had avoided the sort of lending practices seen in Anglo-Saxon economies.

The cluster of residential property securities, worth €4.06bn (£3.27bn), were all based on mortgages that exceeded 80% of the house value, and many were 95% or even 100%. They were all issued in 2007 at the height of the property boom. Fitch downgraded the lower tier A, BBB, and BB tranches of the securities. The upper levels remain stable.

Daily Telegraph