Moody's cuts credit ratings of Spanish banks

Millions of British bank customers faced anxious moments today with Santander becoming the latest giant to be hit by the euro zone crisis.

The High Street lender suffered a downgrade of its credit rating as worried consumers in Spain withdrew £1 billion -  triggering fears of a run on the country's banks.

The move led to fears of a knock-on effect on credit, which could end up pushing up borrowing costs in the future.

The shock downgrade adds to fears of the crisis spreading from Greece and extending for the first time to British shores.

According to analysts, hundreds of UK institutions that have lent on the interbank market to Santander could be in deep trouble if the Spanish lender became a victim of the worsening single currency disaster.

Meanwhile, concerns are being voiced over Santander UK being possibly used to prop up its parent company, Banco Santander, though the Financial Services Authority (FSA) said it was 'unlikely' to allow this to happen.