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Jefferies: US Banks’ Exposure to Italy Is Manageable

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US banks don’t have much exposure to Italy

Jefferies thinks that US banks’ (XLF) exposure to Italy is modest and manageable. The firm thinks that the recent decline in financial sector shares is a good buying opportunity because major US banks don’t have much exposure to Italy. According to Jefferies, JPMorgan Chase (JPM) only had $6.7 billion of exposure to Italy at the end of 2017, while Bank of America (BAC) had $5.4 billion. Jefferies added that Italy didn’t make the top 25 countries in terms of Citigroup’s (C) exposure.

US banks reduce municipal bond holdings

According to quarterly filings with the U.S. Securities and Exchange Commission, Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo (WFC) reduced their holdings of state and local government bonds by $7.8 billion in the first quarter. The government slashed corporate tax rates, which made the securities less valuable to buyers. State Street, Morgan Stanley (MS), and First Republic Bank also reduced their municipal-debt holdings.

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