U.S. bankers tell
Europeans to think positively on Trump
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[January 20, 2017]
By Carmel Crimmins and Pamela Barbaglia
Switzerland (Reuters) - U.S. bankers, buoyed by a resurgence in profits,
are advising their counterparts in Europe to think positively about the
new administration of U.S. President-elect Donald Trump.
But many Europeans still need convincing.
At the annual gathering of the world's political and business elites in
the Swiss resort of Davos, U.S. financiers told investors and overseas'
rivals to focus less on Trump's anti-globalization rhetoric and more on
his cabinet picks, comprising of Wall Street veterans and corporate
Many European bankers fear Trump, who campaigned on an "America first"
platform and who has threatened to impose punitive tariffs on Chinese
imports, could trigger a trade war with the world's second-largest
Jose Vinals, chairman of Standard Chartered Bank <STAN.L> and a former
deputy governor of the Spanish central bank, said there was a lot of
unease over whether the Republican's campaign rhetoric would translate
into his policies as president.
"In Europe, there is concern and trepidation about Trump's
administration and how his politics will affect global trade and
finance," he told Reuters.
"Any form of protectionism will likely ultimately make the U.S. economy
less competitive and be bad news for the world," said Vinals, who has
previously built up an expertise on Asian markets, including China,
while working as a senior official at the International Monetary Fund.
But Mary Callahan Erodes, who runs the asset management arm of U.S. bank
JPMorgan <JPM.N>, sought to assuage concerns about the incoming White
House administration. She told the World Economic Forum that Trump's
officials, including former Goldman Sachs bankers Steven Mnuchin and
Gary Cohn, would push a pro-business agenda that would drive economic
"We are going to have to get used to thinking very pro-actively and
getting excited about growth," she said. "It is a pendulum swing and it
is going to be positive for business. It just is."
Anthony Scaramucci, a hedge fund manager who has been appointed by Trump
to liaise with the business community, was the only member of the new
U.S. administration to attend the Davos forum.
He spoke publicly about how Trump would be good for the global economy
and, according to banking sources, followed this up with private
discussions with European bankers. But the sources said industry players
in Europe wanted more clarity on key U.S. economic policies from Trump
Banks on both sides of the Atlantic might be happy at having a leader in
the White House who has pledged to cut tax rates and ease restrictions
imposed on banks' risk-taking in the wake of the financial crisis.
[to top of second column]
U.S. President-elect Donald Trump listens to questions from
reporters while appearing with Alibaba Executive Chairman Jack Ma
after their meeting at Trump Tower in New York, U.S., January 9,
2017. REUTERS/Mike Segar
At private lunches and evening cocktail receptions in the swish ski
resort, some U.S. financiers expressed concern about the impact from
Trump's blunt re-evaluation of key foreign policy principles and his
penchant for castigating American companies on Twitter.
Most bankers expect volatile market swings in 2017 after investors,
having driven up stock prices in anticipation of tax cuts and spending
hikes, grow impatient for action.
Increased volatility plays to Wall Street banks' greater strength in
trading bonds, stocks and currencies.
U.S. investment banks have already reported bumper fourth-quarter
results following a surge in trading volumes across commodities,
interest rate products and foreign exchange as investors reworked their
portfolios in response to Donald Trump's surprise victory and the
Federal Reserve's interest rate hike.
Goldman Sachs, the bank most dependent on trading, has seen its stock
rise nearly 30 percent since the Nov. 8 election.
European banks have not yet reported fourth-quarter earnings but their
shares have also have been boosted by the U.S. developments.
The region's banking index <.SX7P> is up 15 percent as investors bet
banks such as Barclays and Deutsche, which have U.S. investment banking
operations, will get a boost from increased trading and deal action.
To be sure, some European bankers reflected that sunnier outlook in
Davos, saying Trump was good news for banks.
"He wants banks to have more say in economic growth and I fundamentally
think that is an inextricable link combination, you don't have strong
economies in the long run without strong banks, and vice versa," said
Antonio Horta-Osorio, the chief executive of Britain's Lloyds <LLOY.L>.
"Banks are for the economies like blood is for the body and, therefore,
I see that as very positive."
(Additional reporting by Lawrence White in London; Editing by Pravin
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