Deutsche Bank (DB) shares continue to lead European blue chip gainers this week as investors bet on easier Wall Street regulation and speculate on the nature of the German lender's ties to President-Elect Donald Trump.
Shares in group have risen nearly 4.5% in Frankfurt Friday to change hands at €14.74 each, capping a gain of nearly 20% since Tuesday's election and extending the stock's advance past 45% since the start of the third quarter.
It's a remarkable turnaround for the troubled lender, which has been operating under a cloud of speculation related to a potential $14 billion fine from the U.S. Department of Justice related to the mis-selling of mortgage bonds in the run up to the financial crisis.
The bank's capital position has also raised concerns, given its relatively thin Common Equity Tier 1 ratio - a measure of the amount of cash the bank must set aside to absorb potential losses - of 11.1%, its 25-to-1 leverage ratio and its exposure to global derivatives markets hasn't helped improve its reputation as one of the more swashbuckling investment houses.
That said, the bank has clawed its way to a small (€278 million; $302 million) Q3 profit, reversing a loss of €6 billion in the same period a year ago on the back of ruthless cost-cutting and a turnaround in its trading division.
But that hardly explains DB's recent share price performance, which has risen at triple the pace of the Stoxx 600 Bank Index since the start of the quarter and by nearly five times since the day of the election.
Trump's ties to the German bank are well known and, for the most part, a matter of public record. The President-Elect's financial disclosure forms reveal outstanding loans with Deutsche Bank - mostly in the form of mortgages on some of his key U.S. assets - worth around $400 million.
A Wall Street Journal report from March of this year, however, pegged the total figure in the region of $2.5 billion.
Regardless of the figure, there's certainly little precedent for an American President to have such significant financial ties for a foreign lender - let alone one that is subject to what could be the biggest corporate fine in U.S. history.
The dynamic is further complicated by the fact that Trump is very likely to overhaul both the DoJ's mission and personnel, with reports suggesting one of his closest allies - either former New York mayor Rudy Giuliani or New Jersey Governor Chris Christie - could replace Loretta Lynch as U.S. Attorney General.
The collective events have certainly lit a bullish fire under DB's share price, and it's one that could continue to burn in the months ahead.