** Shares of U.S. banks muted before the open on Thursday, a day after a rally sparked by Donald Trump's reelection

** JPMorgan Chase JPM.N falls 0.6%, while Bank of America BAC.N and Wells Fargo WFC.N gain 0.3% and 0.2%, respectively

** Larger banks will see a lesser impact from the deregulation expected under a Trump administration than regional lenders, according to a note from Morningstar DBRS

** Still, a Republican administration might redo the Basel III endgame capital proposal, which regulators say is needed to safeguard lenders from unforeseen risks

** Banks have hotly contested the proposal, saying it would reduce competition, and have convinced the U.S. Federal Reserve to water it down

** The M&A landscape for the industry could also turn more conducive under Trump, paving the way for more consolidation - Morningstar

** YTD, the S&P 500 Banks index .SPXBK has gained ~40%, while the KBW Regional Banking index .KRX is up ~22% compared with the benchmark S&P 500 index's .SPX ~24% jump

** Separately, the Federal Reserve is expected to lower interest rates later on Thursday

(Reporting by Niket Nishant in Bengaluru)

((Niket.Nishant@thomsonreuters.com))