Oil may push banks to boost reserves

Workers at an oil well in Kazakhstan.
Shamil Zhumatov | Reuters

Wall Street banks are left with a tough choice.

They either can update investors now on oil exposure in 2016, in advance of earnings, and face potential steep sell-offs of their stock, or they can wait until April.

One analyst said he expects Wall Street banks to get ahead of energy loan loss news and announce expanded capital reserves to offset loans to companies in the energy, mining and metals space in advance of earnings.

Wall Street firms including Bank of America, Wells Fargo and Citigroup have yet to issue their expectations for how much loan losses in the energy sector will be offset by cash reserves. The banks declined to comment when contacted by CNBC.com.

The expectation is that most Wall Street banks will seek to announce their reserves before earnings are announced, said Erik Oja, banking and lending analyst at S&P Global Market Intelligence.

"We see it as manageable," Oja said, adding, "I don't see oil staying at $25 [per barrel] for a long time."