By Anupreeta Das
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 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, 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 h as been grappling with
reputational problems 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.
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 Inc., J.P. Morgan Chase & Co. and
Morgan Stanley 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.
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.
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 anupreeta.das@wsj.com
(END) Dow Jones Newswires
March 19, 2016 05:44 ET (09:44 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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