The energy meltdown has taken bank stocks hostage. Investors should cut them free. Fear that oil’s crash will spawn losses that blow holes in big-bank balance sheets are somewhat understandable. It is tough to gauge exactly how exposed banks may be if oil-related firms start going belly up, and the information available isn’t initially comforting. This mainly refers to lines of credit extended to clients that haven’t been tapped. Including these, total exposure is more than 2.5 times as large, or $186 billion in aggregate, for the big four. Fortunately for bank investors, this doesn’t have to be such a big problem, especially considering the big banks’ strengthened capital positions. Oil companies facing lean times have every incentive to draw on credit lines before resorting to more drastic measures like restructuring their debt. However, borrowers can’t use up these loans automatically. Credit-line agreements typically come with covenants that allow […]