More than two decades ago, Donald Trump, the New York developer, found refuge at Deutsche Bank after a consortium of creditors, including predecessor companies to JPMorgan Chase and Citigroup, severed relations with him.
Now, after President Trump’s followers besieged the United States Capitol in a riot that caused at least five deaths last week, even Deutsche Bank doesn’t want to have anything to do with it.
The moves by Wall Street institutions to distance themselves from Trump make their transition to post-presidential life much more difficult. Deutsche Bank has been Trump’s main business lender since the 1990s and owes around $ 340 million in three loans, according to a person familiar with 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 was looking to cut ties with Trump even before the horrific events of January 6, said the person, who did not want to be identified talking about private matters.
“The Trump brand has been severely tarnished; it is toxic from a public relations perspective,” said Mark Williams, professor of finance at Boston University and a former Federal Reserve examiner. “His vital strength has been his ability to borrow money for leveraged transactions. Once this is over, it will put a lot more financial stress on him.”
When his relationship with Deutsche started, Trump was just a well-known real estate developer. The bank had not anticipated its pivot for politics, and when Trump asked Deutsche for a loan of at least tens of millions of dollars during the 2016 Republican primaries, the bank declined, according to the source.
Internally, the bank’s risk committee had been thinking about how to get rid of Trump, Reuters reported in early November. The bank considered unloading its loans elsewhere, but that would likely require Trump’s own approval. The Capitol events were the last straw for Deutsche, the person said.
Still, the bank never lost money to Trump, at least not yet, according to the person. If Trump does not repay his loans, Deutsche can confiscate mortgage-backed golf courses and hotels, and if their value is not enough to pay the debt, the bank can go after Trump personally, who secured the loans, said person.
Other institutions also withdrew from Trump after the siege of the Capitol: Signature Bank, a New York-based institution, asked Trump to resign and said he was closing two personal accounts where Trump held about $ 5.3 million. A spokeswoman said the bank would not do business “with any member of Congress who voted against the Electoral College”. The New York Times reported for the first time the news that the two creditors had moved away from the president.
Trump also had deposit accounts with JPMorgan and Capital One, according to 2019 disclosures. Both banks declined to comment.
For Trump, finding a new place to deposit his money will be relatively simple; it will be more difficult to find a bank willing to lend you huge amounts of money. Almost 30 years ago, the bankruptcy of several Trump properties left banks at a loss, 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 asking for comment.
Of course, Trump, the former president, will have a plethora of ways to make money from the tens of millions of Americans who voted for him. Although it is more difficult to find liquidity, there will be institutions willing to lend to him, perhaps at higher interest rates than Trump is used to, according to Williams.
If not, there is another manual that Trump can rely on.
“Presumably, he will do what he has done at least five times in his career, which is strategic bankruptcy,” said William Black, associate professor of economics and law at the University of Missouri-Kansas City.