More than two decades ago, Donald Trump took refuge in Deutsche Bank after a syndicate of lenders, including JP Morgan Chase and Citigroup’s predecessor firms, cut ties with him.
Now, President Trump’s followers siege the US Capitol in the riots that led to at least five deaths last week, even Deutsche Bank wants nothing to do with him.
The move by Wall Street institutions to distance himself from Trump has made his presidency very difficult. Deutsche Bank has been Trump’s primary business lender since the 1990s and, according to a person familiar with the case, owes about $ 340 million in the three loans.
When those loans come due for 2023 and 2024, Trump will have to repay them in full or find another institution to lend them money. He cannot refinance with Deutsche, who was looking to cut ties with Trump even before the horrific events of January 6, said the man, who refused to speak about personal matters.
Boston University finance lecturer and former Federal Reserve examiner, Mark Williams, said, “The Trump brand has been severely tarnished; he’s toxic from a public relations standpoint.” “His lifespan has been his ability to borrow money for leveraged transactions. As he dries, it will put a lot of financial stress on him.”
When his relationship with Deutsche began, Trump was only a well-known real estate developer. The bank did not anticipate its axis in politics, and when Trump asked for a loan of at least tens of millions of dollars from Deutsche during the 2016 Republican primaries, the bank declined.
Internally, the bank’s risk committee weighed how to differentiate itself from Trump, Reuters reported in early November. The bank considered unloading its loans to other parties, but would likely require its own signature from Trump. The person said the incident at the Capitol was the final straw for Deutsche.
Still, according to the person, the bank has never lost money on Trump, at least not yet. If Trump defaults in his loans, Deutsche has mortgaged and seized golf courses and safe spots, and if their value is not enough to repay the loan, banks can go in person after Trump, who has loaned Guaranteed, the person said.
Other institutions have also distanced themselves from Trump after the siege of the Capitol: Signature Bank, a New York-area institution, has called for Trump to resign, saying it was closing two personal accounts where Trump Had held approximately $ 5.3 million. A spokesperson says the bank “will not do business with any member of Congress who neglected the Electoral College.” The New York Times reported the first two lenders to withdraw from the president.
As of the 2019 revelations, Trump had deposits in JP Morgan and Capital One. Both banks declined to comment.
For Trump, finding a new location to deposit his cash would be relatively straightforward; It will be difficult for the bank to prepare him for lending huge amounts of cash. Nearly 30 years ago, bankruptcies on many of Trump’s assets suffered losses, and Deutsche was one of the only large institutions willing to work with him. A representative of the Trump Organization did not immediately return a message seeking comment.
Of course, the Trump former president would have a myriad of ways to make money from the millions of Americans who voted him. While liquidity would be tough, there would be institutions willing to lend him money, perhaps more accustomed to higher interest rates than Trump, according to Williams.
If not, there is another playbook on which Trump may lean.
“He will probably do what he has done at least five times in his career, which is a strategic bankruptcy,” said William Black, an associate professor of economics and law at the University of Missouri-Kansas City.