Madrid - Banks in peripheral eurozone countries fell sharply on Wednesday on fears that the region’s debt crisis could spread, after rating agency Moody’s downgraded Portugal’s credit standing to “junk” and said Lisbon may need a second bailout. Portugal’s Millennium bcp shed 5.3% and Banco BPI dropped 4.1%, while Spanish banks, which have significant exposure to Portugal, also came under heavy selling pressure, down 2.3%.“Moody’s lowering its rating on Portugal is punishing Spanish banks. They have a certain exposure to Portugal, above all more than other European countries, and that harms them,” a Madrid-based trader said. Spanish banks’ exposure to Portugal stood at $84.6bn at end-December, according to Bank for International Settlement data, more than twice the exposure of German and French banks. Banco Santander, Spain’s biggest bank, lost 2.2% and BBVA dropped 2.3%. In Italy, UniCredit shed 5.2%, Intesa Sanpaolo fell 4.4% and Banco Popolare eased 4.5%. The Thomson Reuters Peripheral Eurozone Bank index fell 3.8%, underperforming a 1.9% drop in the STOXX Europe 600 banking index. The cost of insuring bank debt against default also rose, with the iTraxx Senior Financials index up by 7 basis points to 167 bps.