More than two decades ago, New York developer Donald Trump found refuge in Deutsche Bank after a lender union, including predecessor companies JPMorgan Chase and Citigroup, severed ties.
Now, after supporters of President Trump besieged the U.S. Capitol in a riot that caused at least five deaths last week, even Deutsche Bank wants nothing to do with it.
Movements by Wall Street institutions to distance themselves from Trump make their transition to a post-presidential life much harder. Deutsche Bank has been Trump’s top business lender since the 1990s and owes him about $ 340 million in three loans, according to someone with knowledge of the matter.
When these loans expire in 2023 and 2024, Trump will have to repay them in full or find another institution to lend him the money. He cannot refinance with Deutsche, which had been trying to sever ties with Trump even before the horrific events of January 6, said the person, who refused to identify himself by talking about private affairs.
“The Trump brand has been severely tarnished; it’s toxic from a public relations standpoint,” said Mark Williams, a Boston University finance professor and former Federal Reserve examiner. “His blood has been his ability to borrow money for leveraged transactions. As soon as that runs out, it will put a lot more financial stress on him.”
When he began his relationship with Deutsche, Trump was just a well-known real estate developer. The bank had not planned its pivot toward politics, and when Trump asked Deutsche for a loan of at least tens of millions of dollars during the 2016 Republican primaries, the bank refused, according to the person.
Internally, the bank’s risk committee had been studying how to break away from Trump, Reuters reported in early November. The bank considered the possibility of discharging its loans to other parties, but it would likely require the subscription of Trump himself. The events at the Capitol were the last chance for Deutsche, the person said.
Still, the bank has never lost money with Trump, at least not yet, according to the person. If Trump defaults on his loans, Deutsche can seize mortgage-backed golf courses and hotels, and if their value is not enough to repay the debt, the bank can personally sue Trump, who secured the loans, say the person.
Other institutions also withdrew from Trump after the siege of the Capitol: Signature Bank, an institution in the New York area, has called for Trump’s resignation and said he was closing two personal accounts where Trump kept about $ 5.3 million . A spokeswoman says the bank will not do business “with any member of Congress who has voted to ignore the Electoral College.” The New York Times first reported the news of the two lenders moving away from the president.
Trump also had deposit accounts with JPMorgan and Capital One, according to 2019 disclosures. The two banks declined to comment.
For Trump, finding a new place to deposit his cash will be relatively straightforward; it will be harder to find a bank willing to lend you massive amounts of cash. Nearly 30 years ago, bankruptcies in several Trump properties left banks with 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 any message asking for comments.
Of course, Trump, the former president, will have countless ways to make money with the tens of millions of Americans who voted for him. While liquidity will be harder, there will be institutions willing to lend it, as there may be higher interest rates than Trump is used to, according to Williams.
If not, there is another playbook that Trump can rely on.
“He will presumably do what he has done at least five times in his career, which is strategic failure,” said William Black, an associate professor of economics and law at the University of Missouri-Kansas City.