Deutsche Bank (DB) led gains for European lenders with significant U.S. operations Thursday as investors reacted to the nomination of Steve Mnuchin as U.S Treasury Secretary.
Mnuchin told CNBC television Wednesday that he and Wilbur Ross, the billionaire investor whom President-elect Donald Trump has chosen as his Secretary of Commerce, will roll back the Dodd-Frank Wall Street Reform and Consumer Protection Act and ease regulations for the banking and small business sectors.
Deutsche Bank shares rose 1.35% by 10:30 CET in Frankfurt, topping gainers on the DAX performance index and extending its advance since the November elections to 17.8%. Rival Credit Suisse (CS) gained 1.9% in Zurich to trade at Srf13.74 while Barclays (BCS) rose 0.95% to 217.7 pence each in London. The moves come against a 0.2% decline for the Stoxx 600 Banks index.
Mnuchin, who spent more than 20 years with Goldman Sachs, also aims to privatize government-seized housing refinance giants Fannie Mae (FNMA) and Freddie Mac (FMCC), although he would likely face serious obstacles on Capitol Hill if he tried to do so, according to TheStreet's Ron Orol.
Mnuchin, a former Goldman Sachs partner who was one of Trump's most vocal supporters during the campaign, told Fox Business Wednesday that the two companies often displace private lenders in the mortgage market and should be restructured so they're strong enough to avoid future bailouts.
Deutsche Bank is still facing the spectre of what was expected to be a $14 billion fine from the U.S. Department of Justice over its mortgage-related activities in the run-up to the financial crisis.
However, since Trump's surprise win on Nov. 8 and the subsequent appointment of Alabama Senator Jeff Sessions as Attorney General, investors have increased bets that the penalty could be significantly reduced.