More than two decades ago, Donald Trump, the New York developer, found refuge with Deutsche Bank after a syndicate of lenders, including JPMorgan Chase and Citigroup predecessors, cut ties with him.
Now, after followers of President Trump besieged the Capitol in a riot that left at least five deaths last week, even Deutsche Bank wants nothing to do with him.
Wall Street institutions’ steps to distance themselves from Trump are making his transition to a life after the presidency much more difficult. Deutsche Bank has been Trump’s top corporate lender since the 1990s, and it owes about $ 340 million in three loans, according to an expert.
When those loans mature 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, who had tried to cut ties with Trump even before the horrific events of January 6, the person, who declined to be identified, said speaking on private matters.
“The Trump brand has been severely tarnished; he’s toxic from a public relations standpoint,” said Mark Williams, a finance professor at Boston University and a former Federal Reserve examiner. “His lifeblood has been his ability to borrow money for leveraged transactions. Once that dries up, it will cause him much more financial stress.”
When his relationship with Deutsche began, Trump was just a well-known real estate developer. The bank had not foreseen its linchpin in 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.
Internally, the bank’s risk committee was weighing up how to separate themselves from Trump, Reuters reported in early November. The bank was considering transferring its loans to other parties, but that would likely have to be signed by Trump himself. The events in the Capitol were the last straw for Deutsche, the person said.
Still, the bank has never lost money to Trump, at least not yet, the person said. If Trump defaults on its loans, Deutsche can seize the golf courses and hotels covered by the mortgages, and if their value is not enough to repay the debt, the bank can personally go after Trump, who guaranteed the loans , the person said.
Other institutions also stepped away from Trump after the Capitol siege: Signature Bank, a New York-area institution, has called for Trump to resign, saying it closed two personal accounts where Trump held about $ 5.3 million. A spokeswoman says the bank will not do business “with members of Congress who voted to ignore the electoral college.” The New York Times first reported news of the two backers who relinquished the president.
According to the 2019 revelations, Trump also had deposits with JPMorgan and Capital One. Both banks declined to comment.
It will be relatively easy for Trump to find a new place to deposit his money; it will be more difficult to find a bank that is willing to lend him enormous amounts. Nearly 30 years ago, bankruptcies at several Trump properties left banks with losses, and Deutsche was one of the few major institutions willing to work with him. A representative of the Trump organization did not immediately return a message asking for comment.
Trump, the ex-president, will of course have countless ways to make money off the tens of millions of Americans who voted for him. While it will be harder to find liquidity, there will be institutions willing to lend it, at perhaps higher interest rates than Trump is used to, Williams said.
If not, there is another playbook Trump can lean on.
“He will probably do what he has done at least five times in his career, namely strategic bankruptcy,” said William Black, associate professor of economics and law at the University of Missouri-Kansas City.