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Wall Street has brushed aside a report that Donald Trump is considering breaking up the biggest US banks.

In response to a question from a Bloomberg reporter, the President said that he was “looking at” a forced separation of commercial and investment banking. “There’s some people that want to go back to the old system,” he said, alluding to Glass-Steagall, the Depression-era law that required the activities be kept separate.

Despite the comments, shares in JPMorgan Chase, Bank of America and Citigroup – commercial and investment banking behemoths that would be likely to be thrown into turmoil by a forced split – all closed up on Monday.

“After 100 days we’ve become used to the fact that not everything that comes out of his mouth is a serious consideration,” said Nancy Bush, banking analyst at NAB Research. “His pronouncements are beginning to have a diminishing impact.”

Ian Katz, director at the policy analysis group Capital Alpha, said:

There have been enough comments on the topic by administration officials for us to believe they are indeed interested in some kind of separation of banking activities. But this isn’t a near- or even medium-term threat.

He identified several reasons to be sceptical, including that Congress is more influential on the matter than the White House and has shown little appetite for such radical reforms, and that the President has bigger priorities such as national security and tax reform.

A mandated break up of big banks by Washington would appear to conflict with the administration’s wider de-regulatory push, which has spurred a rally in financial shares.

“You should all thank me for your bank stocks doing better,” Steve Mnuchin, Mr Trump’s treasury secretary, told a conference on Monday.

Copyright The Financial Times Limited 2017. All rights reserved.
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