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When Donald Trump Needs a Loan, He Chooses Deutsche Bank

.. Trump used to anyway .. this prompted by the bank's problems, then thought to include one to Trump's banking woes ..

Despite some clashes, the Republican front-runner has been a regular client of the German lender


Republican presidential candidate Donald Trump at the Trump International Hotel in Las Vegas. Photo: josh edelson/Agence France-Presse/Getty Images

By Anupreeta Das
Updated March 20, 2016 1:35 p.m. ET

One of Donald Trump’s closest allies on Wall Street is a now-struggling German bank.

While many big banks have shunned him, Deutsche Bank .. http://quotes.wsj.com/DB .. AG has been a steadfast financial backer of the Republican presidential candidate’s business interests. Since 1998, the bank has led or participated in loans of at least $2.5 billion to companies affiliated with Mr. Trump .. http://topics.wsj.com/person/T/Mr.-Trump/7071 , according to a Wall Street Journal analysis of public records and people familiar with the matter.

That doesn’t include at least another $1 billion in loan commitments that Deutsche Bank made to Trump-affiliated entities.

The long-standing connection makes Frankfurt-based Deutsche Bank, which has a large U.S. operation and has been grappling with reputational problems .. http://www.wsj.com/articles/deutsche-bank-cut-overall-2015-bonus-pool-by-17-annual-report-1457688553 .. and an almost 50% stock-price decline, the financial institution with probably the strongest ties to the controversial New York businessman.

But the relations at times have been rocky. Deutsche Bank’s giant investment-banking unit stopped working with Mr. Trump after an acrimonious legal spat, even as another arm of the company continued to loan him money.

Related

Donald Trump Owes At Least $250 Million to Banks
http://blogs.wsj.com/moneybeat/2016/03/20/trumpwallst0320/

[EDIT: that link subscriber, so no-no for me .. this one gets me in at least once ..
His creditors mostly are small firms, from New Jersey-based Amboy Bank to specialized real-estate firm Ladder Capital Finance LLC. Deutsche
Bank is the only bank with a big Wall Street presence that continues to lend to him, The Wall Street Journal reported Saturday.
http://blogs.wsj.com/moneybeat/2016/03/20/trumpwallst0320/

Donald Trump’s Three Friends in Finance
http://www.wsj.com/articles/donald-trumps-three-friends-in-finance-1457192917

Other Wall Street banks, after doing extensive business with Mr. Trump in the 1980s and 1990s, pulled back in part due to frustration with his business practices but also because he moved away from real-estate projects that required financing, according to bank officials. Citigroup .. http://quotes.wsj.com/C .. Inc., J.P. Morgan Chase .. http://quotes.wsj.com/JPM .. & Co. and Morgan Stanley .. http://quotes.wsj.com/MS .. are among the banks that don’t currently work with him.

At Goldman Sachs Group Inc., bankers “know better than to pitch” a Trump-related deal, said a former Goldman executive. Goldman officials say there is little overlap between its core investment-banking group and Mr. Trump’s businesses.

The lukewarm relations with banks is one reason Mr. Trump’s White House bid hasn’t received much financial support from Wall Street, bankers and fund managers say. The securities and investment industry, which includes Wall Street firms, has donated roughly $19 million toward the campaign of Hillary Clinton, so far, according to the Center for Responsive Politics. Mr. Trump, who is largely self-funded, has received $17,255.

[inside] Donald Trump’s daughter Ivanka. Photo: Grant Lamos IV/Getty Images

Ivanka Trump, who works with her father at the Trump Organization LLC, which holds the family’s real-estate and other business interests, denied that Wall Street banks are wary of doing business with the family.

“The biggest banking institutions are constantly soliciting us,” Ms. Trump said in an interview. “But we don’t need a lot of financing because we have a great balance sheet and a tremendous amount of cash.”

Deutsche Bank’s relationship with Mr. Trump dates to the 1990s. The bank, eager to expand in the U.S. via commercial-real-estate lending, set out to woo big New York developers such as Mr. Trump and Harry Macklowe.

One of the bank’s first loans to Mr. Trump, in 1998, was $125 million to renovate the office building at 40 Wall Street. More deals soon followed, with the bank agreeing over the next few years to loan or help underwrite bonds worth a total of more than $1.3 billion for Trump entities.

By 2005, Deutsche Bank had emerged as one of Mr. Trump’s leading bankers. That year, the German bank and others lent a Trump entity $640 million to build the 92-story Trump International Hotel and Tower in Chicago. Deutsche Bank officials badly wanted the deal because it came with a $12.5 million fee attached, said a person familiar with the matter.

Mr. Trump charmed the bankers, flying them on his private Boeing 727 jet, according to people who traveled with him.

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But when the housing bubble burst, the relationship frayed.



In 2008, Mr. Trump failed to pay $334 million he owed on the Chicago loan because of lackluster sales of the building’s units. He then sued Deutsche Bank. His argument was that the economic crisis constituted a “force majeure”—an unforeseen event such as war or natural disaster—that should excuse the repayment until conditions improved.

His lawyers were inspired to invoke the clause after hearing former Federal Reserve chairman Alan Greenspan describe the crisis as a “once-in-a-century credit tsunami,” according to a person who worked on the case for Mr. Trump.

Mr. Trump also attacked Deutsche Bank’s lending practices and said that as a big bank, it was partially responsible for causing the financial crisis. He sought $3 billion in damages.

Deutsche Bank in turn sued Mr. Trump, saying it was owed $40 million that the businessman had personally guaranteed in case his company was unable to repay the loan.

Deutsche Bank argued that Mr. Trump had a cavalier history toward banks, quoting from his 2007 book, “Think Big And Kick Ass In Business And Life.”

“I figured it was the bank’s problem, not mine,” Mr. Trump wrote, according to the lawsuit. “What the hell did I care? I actually told one bank, ‘I told you you shouldn’t have loaned me that money. I told you that goddamn deal was no good.’”

The court rejected Mr. Trump’s arguments but the suit forced Deutsche Bank to the negotiating table. The two sides agreed to settle their suits out of court in 2009. The following year, they extended the original loan by five years. It was paid off in 2012—with the help of a loan from the German firm’s private bank.

While Deutsche Bank didn’t lose money on the deal, the fracas soured its investment bankers on working with Mr. Trump. “He was persona non grata after that,” said a banker who worked on the deal.

But not everyone within Deutsche Bank wanted to sever the relationship. The company’s private-banking arm, which caters to ultrarich families and individuals, picked up the slack, lending well over $300 million to Trump entities in the following years.

One of those loans, for $125 million, was to finance the purchase of Miami’s Doral Golf Resort and Spa in 2011, which he re-christened Trump National Doral.

Mr. Trump has promised to hold a celebration there if he is elected president.

Write to Anupreeta Das at [e-mail]

http://www.wsj.com/articles/when-donald-trump-needs-a-loan-he-chooses-deutsche-bank-1458379806

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Deutsche Bank: What to Know

Why the German lender is so important, and other questions about the latest turmoil


Deutsche Bank’s share-price decline of nearly 50% this year has rippled through financial markets. Photo: Agence France-Presse/Getty Images

By Georgi Kantchev
Sept. 30, 2016 4:36 p.m. ET

Deutsche Bank .. http://quotes.wsj.com/DB .. AG this week endured questions about whether it would raise capital, whether the German government would come to its aid and whether it was losing the confidence of the market as some hedge funds dialed back their business .. http://www.wsj.com/articles/deutsche-bank-clients-take-steps-to-cut-exposure-1475179586 .. with the bank. Its stock fell to fresh lows, only to rebound Friday .. http://www.wsj.com/articles/deutsche-bank-shares-slump-on-investor-worries-1475221085 .. to end the week up 1.4%. Its share-price decline of nearly 50% this year has rippled through financial markets and hit other European banks, already beset by the continent’s weak economy and negative interest rates. Here’s a look at the German bank’s troubles.

Why is Deutsche Bank so important?

By many accounts, the bank is too big to fail. With €1.8 trillion ($2.02 trillion) in assets, Deutsche Bank is Germany’s biggest bank and one of the world’s largest lenders. It has more than 101,000 employees. The International Monetary Fund said in June that the bank is the biggest contributor to systemic risk among large lenders, because it is so connected to others.

What’s the latest trouble?

Clients getting scared, and the potential for a fine from the U.S. Justice Department. The latest share-price volatility followed questions about the likelihood that Germany would help the bank .. http://www.wsj.com/articles/deutsche-bank-shares-see-saw-as-justice-department-fine-looms-1474995525 .. as well as reports that clients, including several large hedge funds, have pulled billions of dollars from the bank. The scrutiny followed a Wall Street Journal report that the U.S. Justice Department could demand Deutsche Bank pay $14 billion .. http://www.wsj.com/articles/deutsche-bank-is-asked-to-pay-14-billion-to-resolve-u-s-probe-into-mortgage-securities-1473975404 .. to settle a series of high-profile mortgage-securities cases. The bank says it expects ultimately to pay far less, and the settlement might not be entirely a cash payment. Still, if Deutsche Bank has to write a big check to the U.S. government, that eats into its capital cushion.

Any other issues?

Yes, plenty. Europe is a difficult place for a bank these days. The European economy is sluggish and interest rates are painfully low, making it difficult to turn a profit on the core business of making loans. What’s more, Germany is a fiercely competitive retail- and business-banking market. There is a proliferation of state savings banks that aren’t as motivated by profit and thus push down prices for banking services. Deutsche Bank, of course, is also a global investment bank—and it has faced stiff competition in core investment-banking businesses from American rivals. Earlier this year, Deutsche’s U.S. banking unit failed the Federal Reserve’s annual “stress tests,” because of Fed concerns about its ability to measure risks. It was the second year in a row the German bank flunked.

How has the market reacted?

Badly. Deutsche Bank shares have dropped nearly 50% this year, about twice as much as the Stoxx Europe 600 Banks index. Debt issued by the bank has sold off while the cost to protect against a default by the bank, as measured by its five-year credit-default swaps, is hovering near its highest levels since the depth of the European debt crisis in 2011.

What’s the solution?

That is the billion-dollar question. Deutsche Bank has plenty of cash to satisfy skittish customers who want to leave, and it has access to loads more through the European Central Bank, which offers loans on extremely permissive terms. But a stiff fine, or the prospect of more losses, could erode its capital and require it to seek more. The declining stock price makes raising capital more painful—each new share you sell brings in less money. It is also not clear who would buy in to the bank at this point. The European Union has strict rules about state aid to companies. The bank, which has already fired thousands of employees, might need to cut some more costs and sell assets.

Is Deutsche Bank creating another Lehman moment?

Not yet .. http://www.wsj.com/articles/the-ghost-of-lehman-brothers-haunts-deutsche-bank-1475193863 . In 2008, Lehman Brothers failed in large part because panicked hedge funds pulled out their money, helping to trigger the worst financial crisis since the Great Depression. Unlike Lehman, Deutsche Bank has a far more diversified client base, spread among German retail banking and multiple institutional business lines. Perhaps most important, the Frankfurt-based lender also has access to the European Central Bank, which makes cheap loans available to banks and has provided them in copious amounts during and after the eurozone’s debt crisis.

—Mike Bird contributed to this article.

http://www.wsj.com/articles/deutsche-bank-what-to-know-1475267815