European banks have turned a corner in the week since the U.S. presidential election, with some of the continent's titans seeing their stock prices rise by around 15% on expectations of higher inflation and a less onerous regulatory environment.
The sector also received an added boost from a third-quarter earnings season that saw a robust performance from the region's biggest lenders.
Mike Harrison, an analyst at Barclays (BCS) , said last week; "Eighty six percent of the banks we look at have reported better-than-expected attributable profits -- mostly driven by revenues."
But recent speculation that the European Commission could soon impose fines on JPMorgan Chase (JPM) , HSBC (HSBC) and Credit Agricole (CRARY) over their role in rigging the London Interbank Offered Rate, or LIBOR, and other benchmarks shows that litigation risk will remain alive and well regardless of what happens on Capitol Hill from January.
Reuters reported Tuesday that the Commission has decided to impose fines against the three banks but that it has been holding off on the announcement. The report also stated that an announcement could be delayed for a number of weeks further still, without specifying why.