September 18, 2007 (LPAC)--Shares in Spanish banks collapsed yesterday after Adam Applegarth, chief executive of the sinking British bank, Northern (on the) Rock(s) mortgage bank, told the media that three Spanish banks had sought European Central Bank help last week. This was enough for investors to cash out their holdings in most of the leading banks, since it is widely known that the huge Spanish real state bubble is already losing air very rapidly.

Share price of Banco Pastor dropped 9.7%, while the Financial Times reports that Citigroup downgraded four Spanish banks, saying they did not deserve the favorable ratings they enjoyed. Among those banks was Bankinter, which lost 5.7% after it was downgraded from hold to sell. Banco Sabadell, lost 4% after it too had its rating going for hold to sell. Banesto, going from buy to hold lost3.8% and Banco Popular, which went from buy to sell, lost 3.3%. Spain's two largest banks, Santander and BBVA, lost 1.6% and 1.9% respectively.

Despite statements from Spanish Finance Minister Pedro Solbes saying, "There are no parallels between what happened in the UK and the situation here," everyone knew this crisis was coming. Already last week Banco Popular cancelled the placement of 2 billion euros worth of mortgage backed securities because they know there would be no buyers. Ahorro Titulizacion, an investment vehicle belonging to several Spanish banks also canceled a securitization issue because the selling of debt as assets has collapsed.