Europe closes higher on Greek reshuffle; DAX up 1.9%

European equities closed higher Monday, with investor sentiment boosted by a reshuffle of the team of Greek officials that are negotiating with its creditors.

Greece finishes 4% higher

The pan-European Euro Stoxx 600 Index closed higher by around 1 percent after spending much of the morning session in negative territory. The German DAX bounced and finished higher by around 1.9 percent and Greek stocks posted gains of over 4 percent.

Greek lenders like Alpha Bank rose to the top of benchmarks following reports that Greek Prime Minister, Alexis Tsipras, had decided to change the team of Greek representatives that are currently in talks with the International Monetary Fund and the European Union. Deputy Foreign Minister, Euclid Tsakalotos, was appointed co-coordinator of the group, according to the reports.

"We've had what by all accounts is some solid progress in Greece with a shake-up in the team that's dealing with the country's debt restructuring," Tony Cross, a market analyst at Trustnet Direct, said in a research note.

"The country's finance minister has reportedly seen his role in the negotiations relegated and the interpretation of this is that progress can only accelerate from here."

In the U.S., stocks started the day higher as investors took a positive view on earnings reports ahead of the U.S. Federal Reserve meeting this week.

Deutsche Bank down

In individual stocks news, shares of Deutsche Bank finished lower by around 4.5 percent after the bank announced an overhaul of its banking operations on Monday.

Outlining its "next phase of strategy," the German lender said would deleverage its corporate banking and securities division. It also said it was targeting savings of 3.5 billion euros ($3.8 billion) annually, but that this would cost a one-off 3.7 billion euros to achieve.

Read MoreDeutsche Bank overhaul targets $3.8B annual savings

In other banking news, Royal Bank of Scotland, which is 80 percent owned by the British government, has sold a further portfolio of North American loans to Mizuho, as it continues to sell off unwanted international assets to focus on domestic lending. Shares of RBS ended the session slightly higher despite trading down 1.2 percent at the open.

Meanwhile, focus remained on HSBC and whether the bank could relocate its headquarters back to Hong Kong. HSBC's Chairman Douglas Flint told CNBC after the bank's annual general meeting (AGM) on Friday that such a move "would be potentially interesting." Shares of the bank ended Monday's session 3.5 percent higher.

Volkswagon up

Elsewhere, Volkswagon Chairman Ferdinand Piech, who recently told the media he had withdrawn his support of the company's Chief Executive Martin Winterkorn, has resigned after pressure from the VW board. Shares of the company ended around 5 percent higher Monday and the autos sector outperformed the wider markets and saw gains of over 2 percent.

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