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NEW YORK / FRANKFURT: Deutsche Bank AG is seeking ways to end its relationship with President Donald Trump after the US election as it tires of the negative publicity stemming from the ties, according to three senior bank officials with direct knowledge of the affair.
Deutsche Bank has about $ 340 million in outstanding loans to the Trump Organization, the president’s umbrella group that is currently overseen by his two sons, according to documents submitted by Trump to the U.S. Office of Government Ethics in July and a high-level source within the bank. . The three loans, which are against Trump’s properties and begin to mature in two years, are current on payments and personally guaranteed by the president, according to two bank officials.
In meetings in recent months, a Deutsche Bank management committee that oversees reputational and other risks to the lender in the Americas region has discussed ways in which it could rid the bank of these last vestiges of the relationship. said two of the three bank officials. Over the years, the bank has loaned Trump more than $ 2 billion, one of the officials said.
One idea that has come up at the meetings: sell the loans on the secondary market, two of the bank officials said. But one of the officials said the idea has not gained traction, in part because it is unclear who would want to buy the loans and the problems that come with it.
While Deutsche Bank was known to have been closely examining its relationship with Trump, including by creating a task force in 2016 to review the bank’s relationship with him, its recent eagerness to end all ties and contours of the discussions in light of the elections. have not been previously reported.
Deutsche Bank declined to comment. The Trump Organization did not respond to requests for comment. The White House declined to comment.
WARREN WARNING
The German bank, which began lending to Trump in the late 1990s, has been dragged into congressional and other investigations into the real estate mogul-turned-politician’s finances and alleged connections to Russia.
The investigations and bad press, seen by a senior executive as “serious collateral damage” to the relationship, are an unwanted distraction for the bank, the three officials said. It comes at a time when CEO Christian Sewing is trying to change Deutsche Bank after his decades-long run to become a major Wall Street bank left him with huge losses.
Elizabeth Warren, a Democratic member of the Senate banking committee, has previously called for an investigation into Deutsche Bank for its money laundering controls and has demanded responses from the lender about her relationship with Trump and his family. She told Reuters she intended to continue pushing for an investigation in the next administration.
“You can bet that I will continue to fight for accountability and strict enforcement of our banking laws, especially for giant institutions like Deutsche Bank,” he said.
What happens next for the bank depends on the outcome of Tuesday’s election, according to the three bank officials.
If the Republican president loses and the Democrats take control of the White House and Congress, senior Deutsche Bank executives believe that congressional investigations that have stalled amid a court battle over access to Trump’s financial records they could be rejuvenated, the three bank officials said.
In this scenario, however, Deutsche Bank executives believe they will also have more freedom to deal with loans and end their relationship with Trump, the officials said. They hope doing so can help reduce some of the scrutiny, they said.
DIFFERENT STAGES
The loans, which are against Trump’s golf course in Miami, and hotels in Washington and Chicago, are such that the Trump Organization has only had to pay interest so far, and the full principal is outstanding, two of the three said. bank officials. . They expire in 2023 and 2024, documents show.
The companies that back the loans face challenges. The economic slowdown fueled by the coronavirus has affected the travel industry, including hotels. Also, Reuters reported last month that Trump’s plan to make money by developing houses and hotels on his golf courses, including the one involving the Deutsche Bank loan, had so far not worked.
Deutsche Bank executives are not unduly concerned about Trump’s ability to repay the loans, given the president’s personal guarantees and the time left before they are due, the three bank officials said.
If Trump is not in office, Deutsche Bank executives believe it would be easier for them to demand repayment, foreclose if they cannot pay or refinance it, or attempt to sell the loans, according to two of the bank’s three officials. .
Since Trump has personally guaranteed all the loans, Deutsche Bank could also seize the president’s assets if he cannot pay, two of the three bank officials said.
If Trump wins a second term, Deutsche Bank executives feel their options would be less, the three bank officials said. The bank would not want the negative publicity inherent in a sitting president’s asset seizure and would likely extend the loans until he leaves office, two of the bank’s officials said.
The bottom line, the three bank officials said, is that the matter won’t be resolved until long after the election.
(Edited by Rachel Armstrong; Paritosh Bansal and Edward Tobin)
