Given what’s going on in the world right now, U.S. bank investors can be forgiven for sticking closer to familiar territory, the Wall Street Journal reported. Overall, U.S. banks don’t have a significant amount at risk directly in Russia, with by one measure roughly $15 billion worth of exposure to the country, according to Bank for International Settlements data. That is a relative drop in the bucket. But banks’ direct claims aren’t the end of the story and many bank stocks have tumbled with the broader market this year. One possible worry was that interest rates could rise more slowly if the spillover from Russia’s invasion of Ukraine impacted the U.S. economic outlook. For now, though, the Federal Reserve is sharply moving up its rate projections and penciling in several more increases. Bank stocks are typically closely linked to rates because their interest income is expected to rise as rates do. Wall Street banks that earn lots of fees from clients can outperform if there is a question about a slower pace of rate increases. But disruptions in markets — particularly in commodities, where prices have gyrated — have themselves been a major part of the concern in recent weeks. Market gyrations and selloffs can depress banks’ revenues from client trading or advising companies on mergers and capital raising. Analysts’ estimates anticipate first-quarter year-over-year trading revenue declines of about 20% across the biggest Wall Street banks.
