Deutsche Bank is under scrutiny as the only financial institution willing to loan Donald Trump money when everyone else recognized he was a terrible risk.
Deutsche appears to have know its affiliation with the now president would be problematic, first denying him loan money during the 2016 campaign and then attempting to offload quickly after the election a big, outstanding loan it had to the Kremlin-controlled VTB.
The Wall Street Journal reported Saturday that Deutsche Bank, seeking to slash its exposure to Russia in late 2016, scrambled to sell a $600 million loan it had outstanding to VTB, according to documents and people familiar with the funding.
The German lender sold $300 million of the loan to Russia’s Alfa Bank, in December 2016; Deutsche Bank wasn’t able to sell the rest of the loan, and VTB paid it back in August 2017, the documents show and the people said.
Deutsche Bank’s effort to unload the VTB loan—which hadn’t been previously reported—came as the German bank worried about its financial contacts with Russia, which U.S. intelligence officials accused of interfering in the 2016 presidential election while the campaign was still under way. The bank sought to reduce as much exposure as possible to Russian entities and was shedding assets to boost its own cash position.
WSJ:
VTB’s financial dealings have been under the spotlight. Felix Sater, a longtime Trump business partner, repeatedly told Mr. Trump’s then-lawyer Michael Cohen during the 2016 campaign that he had received assurances from Russian business associates with ties to the government that VTB was willing to finance a deal for a Trump Tower in Moscow, according to people familiar with the discussions.
“No VTB Group subsidiary ever had any dealings with Mr. Trump, his representatives, or any companies affiliated with him,” VTB said in its statement. Though Mr. Trump signed a letter of intent with a Russian real-estate development firm in October 2015, the proposal never went ahead.
VTB is Russia’s second-largest bank and is majority-owned by the Russian government. Senior VTB executives have close ties with Mr. Putin, recently working together on a plan to wean Russia off U.S. dollars to counter damage to the Russian economy from Western sanctions.
Trump reportedly went back to Deutsche in 2016 and asked for more money to renovate his golf club in Scotland while he was running for president.
Senior officials at the bank, including its future chief executive, believed that Mr. Trump’s divisive candidacy made such a loan too risky, the people said. Among their concerns was that if Mr. Trump won the election and then defaulted, Deutsche Bank would have to choose between not collecting on the debt or seizing the assets of the president of the United States.
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The failed loan request is an untold chapter in Mr. Trump’s long and tortured relationship with the banking industry. It shows that he was actively engaged in running his business in the midst of the presidential campaign, and it is likely to attract scrutiny from Democrats on two House committees that are investigating his two-decade relationship with Deutsche Bank.
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... In 1998, it lent Mr. Trump $125 million for renovations on a Wall Street skyscraper. The relationship blossomed, and over the next 17 years, Deutsche Bank lent or participated in loans to Mr. Trump and his companies totaling more than $2.5 billion.
Then, just as the first votes were being cast in the Republican presidential primaries, Mr. Trump’s lender of last resort got cold feet.
The funding of Mr. Trump’s golf empire has been something of a mystery.
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A prominent golf journalist, James Dodson, said Mr. Trump’s son Eric had told him in 2013 that the company’s golf properties were funded by Russians. Eric Trump has denied making the comment.
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Representative Adam Schiff, the chairman of the House Intelligence Committee, which is investigating Russian efforts to interfere in the 2016 election, has said he wants to look closely at Deutsche Bank because of its past involvement in laundering money for Russian nationals. And Democrats on the House Financial Services Committee, overseen by Representative Maxine Waters, have been asking questions about Deutsche Bank’s loans to Mr. Trump since 2017.
Mr. Schiff and Ms. Waters are planning to conduct a joint investigation of Mr. Trump’s involvement with Deutsche Bank.
European lawmakers also are asking questions of the bank and what role it may have played in a Dutch bank's money laundering operation. It's an inquiry members of Congress are watching with interest.
The European Parliament’s committee on tax avoidance will ask at a hearing about Deutsche Bank’s role in helping the Danish entity move cash abroad. Danske Bank is under fire for funneling 200 billion euros ($229 billion) in non-resident money through its Estonian branch between 2007 and 2015. Since a Danske Bank whistleblower brought the possible scheme to light in 2018, Deutsche Bank has said it is cooperating with inquiries from regulators and law enforcement worldwide.
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Financial Services Chairwoman Maxine Waters (D-Calif.), who has called for the president’s impeachment, has vowed to use her new investigative power to follow the “Trump money trail,” starting with Deutsche Bank. She is working with Intelligence Committee Chairman Adam Schiff (D-Calif.), who is leading an effort to investigate Russia’s role in the presidential election. Schiff has said Deutsche Bank is "one obvious place to start" as he looks into possible money laundering by the Trump Organization.
“We’re doing as much as we can together,” Schiff said in an interview.
In the Senate, Sen. Chris Van Hollen has led a push to persuade the Republican-led Senate Banking Committee to hold a hearing on Deutsche’s possible role in money-laundering schemes.
In an interview, the Maryland Democrat said the subject has come up in conversations he has had with European officials.
Van Hollen is following the EU Deutsche Bank inquiry “very closely,” and he said the bank’s activities in Europe “may provide important lessons for what’s happening here in the United States."
Investigators Expected to Probe Deutsche Efforts to Shed Loan to Russian Bank (WSJ) *Note: All WSJ articles appear behind a paywall
Deutsche Bank in Late 2016 Raced to Shed Loan It Made to Russian Bank VTB (WSJ)
Trump Sought a Loan During the 2016 Campaign. Deutsche Bank Said No. (NYT)
Dirty money fears push Deutsche Bank into trans-Atlantic spotlight (Politico)