The crisis gripping Fannie Mae and Freddie Mac has spread across the financial system with JPMorgan Chase warning of a possible $600m (£323m) loss from its holdings of preferred shares in the two mortgage financing groups.

JPMorgan said it would write down the value of its $1.2bn of preferred shares in Fannie and Freddie by half.

Banks and insurers own most of the $36bn in preferred stock in Fannie and Freddie, and JPMorgan’s announcement will raise pressure on other holders to make similar writedowns.

Preferred shares are a hybrid of debt and equity and are attractive to investors because they pay interest above equivalent debt instruments.

No other bank has written down the value of its Fannie and Freddie preferred shares, and only a few have revealed their holdings. Philadelphia-based Sovereign said last week that it held more than $600m in Fannie and Freddie preferred stock.

Financial Times