Shares of U.S. banks including Citigroup Inc., JPMorgan Chase & Co. and Goldman Sachs Group Inc. surged as investors wagered that Donald Trump would make good on his promises to lower taxes and reduce regulation for the industry.
During the campaign, Trump vowed to cut the corporate tax rate to as low as 15% from 21%, and to eliminate 10 regulations for every new one — offering a more attractive environment for banks than his rival Kamala Harris, who had planned to raise corporate taxes.
He also promised to overhaul key regulatory bodies and pledged to fire regulators including Securities and Exchange Commission Chair Gary Gensler.
"We are confident that the regulatory pendulum will swing back somewhat," Mark Fitzgibbon, an analyst at Piper Sandler, said in a note to clients. "Many bankers would quietly complain to us that their examiners were unreasonable, irrational or simply opaque. We believe this will improve with a more bank-friendly administration."
Trump's win adds to a string of good news for U.S. bank bosses, who had already been optimistic in recent months about navigating a falling interest-rate environment and the Federal Reserve's ability to pull off a soft landing for the economy.
That had helped push the 24-company KBW Bank Index up 27% so far this year through the close of trading on Tuesday. The index added an additional 8/9% early Wednesday, the biggest intraday gain in four years.
Shares of Citigroup soared 8.6% at 2:40 p.m. in New York. JPMorgan rose 10.6%, and Goldman jumped by about 13.2%. An exchange-traded fund that tracks the movement of major bank stocks also climbed, putting it on track to reach the highest level in more than two years.
Basel Watch
Trump's return to the White House could also mean a win for executives who had been lobbying against the U.S. adopting its latest version of the so-called Basel rules, which would increase the amount of capital they must hold.
The U.S. has already relaxed the planned capital requirements for its biggest banks. But there's been growing speculation that Trump "may upend the Basel proposal and put the financial sector on a deregulatory path," Bloomberg Intelligence analysts wrote last month.
"Former President Donald Trump's reelection likely staves off any capital increases for banks under the rule known as the Basel III Endgame," said Nathan Dean and Arnold Kakuda of Bloomberg Intelligence.
"New regulatory leadership at the Office of the Comptroller of the Currency in 2025 will likely refuse to move forward. We can't rule out a watered down version of the rule being finalized in 2026 or 2027, but initially, we think work associated with the rule will be paused," they added.
Trump's policies could also usher in a revival of dealmaking and capital-markets activity, according to Wells Fargo & Co.'s Mike Mayo. That could help lift lenders' investment-banking revenue above the highs they last reached in 2021, he said.
