As we prepare for the earnings of JPMorgan Chase (JPM , quote) and Wells Fargo (WFC, quote) tomorrow, Bank of America (BAC, quote) Wednesday and Citigroup (C, quote) on Thursday the EU banks are getting a big boost today and seem to have other drivers than core profitability: less Basel.

Business-BankingGlobal regulators are diluting a planned debt limit on banks and easing capital structure ratios as they seek to avoid the impact on lending.

Ultimately the loosening of the proposed rules means the banks won’t have to raise as much as $200 million in capital (according to Bloomberg) at a time when they should be focused on easing the economic malaise in Europe. 

This news is well received today with EU banks rallying across the board.  Some banks, like Deutsche Bank (DB, quote), like this news even more than others as they are seen as having been most punished by the leverage issues. 

The FT is talking about a 20bp improvement for Global banks under the changes.    I have been particularly bearish of DB relative to peers over the last couple years on these capital issues.  

This announcement could offer a catalyst to what is arguably the best priced (7X p/e) EU banking play when balanced with their ability to grow profits. 

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