Why Deutsche Bank Is Trying To Break Up With Donald Trump

Deutsche Bank executives are looking for a way to dump their business ties with Donald Trump after bad press and mounting U.S. government scrutiny.

Three unnamed sources at Deutsche told Reuters that its management team for reputational risk began weighing options in recent months to end the three loans Trump has with the German multinational bank.

The ties started to cause headaches as soon as Trump took office in 2016, with Deutsche creating a working group to reexamine their relationship to the president. Trump’s business conflicts were a frequent source of criticism and Deutsche soon found itself being drawn into congressional investigations.

The exposure ate up the bank’s time and resources, not to mention the bad publicity of being the only bank willing to continue loaning Trump money after he defaulted on loans from them, made transactions flagged as possible money laundering, bankrupted six businesses and somehow ran his casinos at a loss.

Reuters' sources said Deutsche executives saw the bad press and congressional attention as “serious collateral damage.”

Offloading $340 million in loans to Trump is highly challenging and bankers had considered trying to sell the loans on the secondary market. However, finding possible buys is very difficult.

The loans total to $340 million, which are taken against Trump's properties and personally guaranteed by him. They will start to be due within two years and Deutsche will have to game out various possible outcomes.

If Trump wins the presidency, the bank will likely delay the collection of the funds until he’s out of office.

Should Trump leave office in 2021 and Democrats win the majority of the House and Senate, Deutsche faces a different set of problems. Investigations into Trump’s finances, now stalled by Sen. Mitch McConnell, R-Ky., could spin back to life and create more headaches.

Sen. Elizabeth Warren, D-Mass., has pledged to continue her investigations into financial ties and money laundering.

“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,” Warren told Reuters.

Deutsche would, however, be able to call in its debts. Employees told Reuters they weren’t worried that Trump wouldn’t be able to pay up given their generous timetable and the possibility of repossessing his property if he defaults.

Less clear is how much his businesses are actually worth. The pandemic has hit Trump’s service-based businesses hard and he reportedly hasn’t been able to make the developments he originally hoped would help him pay off debts.