As the market sorts out who will benefit and who will not during a Donald Trump administration, count one in the winner's bracket: banks.
Despite getting little Wall Street cash during the election, Trump already is being perceived as friendly to the $15 trillion banking industry. He has promised a rollback in regulation, and traders quickly interpreted his win as leading to the higher interest rates that banks like.
The result was a gain exceeding 4 percent for bank stocks as a whole (as measured by the KBW Bank Index) and optimism that the good times were just starting.
"This is a grand slam home run for the industry," Dick Bove, vice president of equity research at Rafferty Capital Markets, said in an interview.
Bove sees benefits to banks from three angles: legislative, regulatory and economic. Banks are likely to see key measures passed in Congress, regulatory measures rolled back and an inflow of cash to the financial system.
Changes in personnel
Among the biggest changes: adoption of Rep. Jeb Hensarling's proposal to set a different benchmark — 10 percent equity to assets — for more intense regulations; elimination of the so-called Volcker Rule that restricts banks trading for their own accounts; and a weakened Consumer Financial Protection Bureau.
In addition, he believes the Federal Reserve and some of its top officials could face intense political pressure from Trump. He specifically pointed to Daniel Tarullo, who oversees the banking system and whose term does not expire until 2022.
"I think that Tarullo is gone. He has been perhaps the source of more regulation for the financial industry than anyone else in the history of the U.S. government," Bove said. "The Fed is going to get the message: We're looking for you to figure out ways to make banks more productive, to assist the economy."
Fed officials declined to comment.
At the same time, the CFPB has been the target of Republicans' ire since President Barack Obama formed it as a check against abusive bank behavior.
Trump has targeted it as intrusive and overreaching, and its role likely will change significantly.
"We do not think the bureau is dismantled, but the new leader will likely shelve the upcoming regulatory agenda," analysts at FBR Capital Markets said in a note to clients. "The threat of enforcement actions is also significantly diminished."
Smaller banks, bigger boost
The Dodd-Frank reforms also are likely to come under scrutiny. Trump at one point had pledged repeal, but that appears unlikely. Doing so would be nearly impossible as many of the changes already have been enacted.
However, there likely will be substantial adjustments, with consensus holding that the biggest beneficiaries will be smaller banks that will see their regulatory burden eased.
"Anti-Wall Street populism remains strong, and we believe it helped fuel the Trump campaign," FBR said. "We would expect the first attempts at reform to be promoted as community bank reform and expect regional banks to see the most benefit."
Trump will look to implement his agenda through appointments.
Analysts at Keefe, Bruyette & Woods see the president-elect possibly pushing out Mary Jo White as head of the Securities and Exchange Commission, while he will see bank-friendly appointees to other slots. (White was not immediately available for comment.)
"We think the main result of Donald Trump's election will be that Trump will be able to appoint regulators who are more industry friendly than regulators appointed by President Obama. The regulatory implications are more important than what might come out of Congress but are broadly positive for financials in our view," KBW said in a note.
During the campaign, Trump also vowed to reinstitute the Glass-Steagall Act, which separated commercial and investment banks. However, the move does not appear to be high on his agenda and may not come to pass.