Deutsche Bank AG is to sever all ties with President Trump and the Trump organization according to a source with knowledge of the sudden business decision.
But the bank will still be forced to deal with the Trump family and their employee for some time to come with outstanding loans of more than $300 million yet to be repaid.
The decision by the German bank follows a glut of social media companies and other firms which are suspending links with the President following last week’s rally at the Capitol which left five people dead.
A second, smaller lender, Signature Bank which is based in New York, has also said it is to cut ties while pushing for the president’s resignation.
Signature has said it is closing two personal accounts in which Trump holds around $5.3 million.
Two of the banks Donald Trump does business with are pulling away from him. Trump is pictured last week at the ‘Save America’ rally
Deutsche Bank AG will not do any further business with Trump or his company, although Trump still owes the German lender more than $300 million in loans. Pictured the headquarters of Deutsche Bank in Frankfurt, Germany
Supporters of U.S. President Donald Trump gather in front of the U.S. Capitol Building in Washington before the riots Wednesday
In November, Deutsche Bank said that Trump’s longtime banker had resigned.
Rosemary Vrablic, an employee in the private banking division, oversaw the approval of hundreds of millions of dollars in loans to Trump’s company over several years.
The relationship meant the bank came under pressure from lawmakers and prosecutors looking for information during Trump’s presidency.
As of November, Deutsche Bank had about $340 million in loans outstanding to the Trump Organization, currently overseen by his two eldest sons according to Bloomberg.
The money comprises of three loans which are against Trump properties and start coming due in two years. The loans are current on payments and personally guaranteed by the president, according to two bank officials.
In November, Deutsche Bank said that Trump’s longtime banker had resigned. Rosemary Vrablic, an employee in the private banking division, oversaw the approval of hundreds of millions of dollars in loans to Trump’s company over several years. Vrablic is pictured with the president’s son-in-law Jared Kushner
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 on them so far, and the entire principal is outstanding. They come due in 2023 and 2024, the filings show.
Both Deutsche Bank, top, and Signature Bank are severing ties with President Trump and the Trump Organization
But the businesses backing the loans are currently facing challenges.
The coronavirus-driven economic slowdown has hit the travel industry, including hotels.
In October, Trump’s plan to make money by developing houses and hotels on his golf courses, including one involving the Deutsche Bank loan, has not panned out so far.
Deutsche Bank executives are said to not be unduly concerned about Trump’s ability to repay the loans, given the president’s personal guarantees and the time left before they come due.
Nevertheless, in meetings in recent months, a Deutsche Bank management committee that oversees reputational and other risks for the lender in the Americas region has discussed ways in which it could rid the bank the relationship.
Over the years, the bank has lent Trump more than $2 billion.
Various ideas have been put forward to speed up the cutting of ties with one being to sell the loans in the secondary market. But the idea has not gained traction, in part because it is not clear who would want to buy the loans. Another alternative might be to forgive the loans altogether.
It has been known for several years that Deutsche Bank was looking at its relationship with Trump and in 2016 set up a working group to review its position.
The election and its aftermath coupled with last weeks siege of Congress have increased the eagerness with which the bank is proceeding
But the election and its aftermath coupled with last weeks siege of Congress have increased the eagerness with which the bank is proceeding to cut itself loose.
The bank, which first started 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 Russia connections.
The probes and the bad press were seen as ‘serious collateral damage’ from the relationship, and were an unwelcome distraction for the bank at a time when Chief Executive Christian Sewing was trying to turn Deutsche Bank around after its decades-long run at becoming a major Wall Street bank left it nursing huge losses.
Elizabeth Warren, a Democrat member of the Senate banking committee, has previously called for an investigation into Deutsche Bank over its money laundering controls and has demanded answers from the lender about its relationship with Trump and his family.
She told Reuters that she intended to keep pushing for a probe in the next administration.
One of the the $340 million in loans was for the Trump International Hotel in Washington D.C.
Another of the outstanding loans for was for the Trump National Doral in Miami. Trump is pictured, center
‘You bet I’m going to continue to fight for accountability and strong enforcement of our banking laws, especially for giant institutions like Deutsche Bank,’ she said.
Once Democrats take control of the White House later this month, senior Deutsche Bank executives believe congressional investigations that have stalled amid a court battle over access to Trump’s financial records could be restarted.
Deutsche Bank executives will also have more freedom to deal with the loans and end their relationship with Trump once and for all.
Once Trump is out of office it will be easier for the execs to demand repayment, foreclose if he is not able to pay it off or refinance, or try to sell the loans, according to two of the three bank officials spoken to by Reuters.
Since Trump has personally guaranteed all the loans, Deutsche Bank could also seize the president’s assets if he is unable to repay.
Signature Bank issued a statement Monday which said: ‘We believe the appropriate action would be the resignation of the president of the United States, which is in the best interests of our nation and the American people.’
Signature bank looked after Trump and family members including Ivanka Trump, Jared Kushner and Michael Cohen.
In 2011, the bank appointed Ivanka to its board, but she stepped down a couple of years later. The New York Times reported the cutting of ties earlier on Monday.
‘We have never before commented on any political matter and hope to never do so again,’ Signature said in its statement. The bank will not do business in the future with any members of Congress who voted to disregard the electoral college, the spokesperson said.
Deutsche Bank has declined to comment. The Trump Organization has not responded to requests for comment.