Deutsche Bank rejected loan request from Trump in 2016
German lender worried about the reputational and financial risk
Deutsche Bank rejected a loan request from Donald Trump in early 2016 after deciding the reputational and financial risks were too high, according to a person familiar with the matter.
Germany’s largest lender had a decades-long relationship with Mr Trump, extending hundreds of millions of dollars in credit for property deals and other ventures despite his history of bankruptcies.
But during Mr Trump’s presidential campaign three years ago, Deutsche Bank rejected a request for a new loan. The decision was first reported by The New York Times.
The request was discussed and ultimately rejected unanimously by Deutsche Bank’s group reputational risk committee. One of the executives who backed that decision was Deutsche Bank’s current chief executive Christian Sewing, who was then the co-head of the lender’s private and commercial bank.
Deutsche Bank is facing questions over its relationship with Mr Trump from Democratic lawmakers, who are keen to use their newly-acquired subpoena power in the House of Representatives to examine the president’s finances and look for links to Russia.
Among the reasons for turning down the loan was Mr Trump’s acrimonious campaign, which the managers thought could harm Deutsche Bank’s reputation. Another worry was a scenario under which Mr Trump defaulted on the loan after winning the election. In that instance, Deutsche Bank would face the awkward prospect of either writing off the debt or seizing property of a sitting US president.
The White House referred a request for comment to the Trump Organization. A lawyer for the Trump Organization did not respond.
Deutsche Bank faced further scrutiny over the weekend after it emerged that it had reduced its exposure to Russian state-owned lender VTB in 2016.
The decision, first reported by the Wall Street Journal, was made as part of a push to cut its exposure to Russia after the Ukraine-related sanctions were imposed, according to a person familiar with the transaction.
The lender sold a $300m wholesale loan it had granted to VTB to Alfa-Bank, the private Russian lender, and took a small loss on the loan’s book value, equivalent to about 1 per cent, according to the person.
At the time, Deutsche Bank was under intense market pressure due to rumour about a potential $14bn fine by the US Department of Justice.
The German bank failed to find a buyer of a second $300m tranche of wholesale loan to VTB, which matured and was repaid by the Russian lender in 2017.
A person briefed on Deutsche Bank’s internal discussions stressed that the German lender’s decision to hive off the VTB loans was not at all linked to potential links between the Russian government and Mr Trump’s presidential campaign. “Any insinuation to this effect is fabricated,” the person said.
Deutsche Bank declined to comment.