The Donald's dollars
March 23, 2016Donald Trump's ancestors hail from Kallstadt, Germany, a tiny wine village not far from Frankfurt. When the billionaire needs a loan, that's also where the money comes from.
Trump gets most of his financing from Deutsche Bank, Germany's largest bank. It has lent billions of dollars to the real estate developer and presidential candidate. And it's been a rocky relationship for both of them.
Trump's deals with Deutsche Bank started in 1995 when he finally bought a building he had long been eyeing: a skyscraper once known as the Bank of Manhattan Trust building.
Built in 1930 and topped by a gorgeous copper roof, this architectural treat was once the world's tallest building. It's also just a few steps away from the New York Stock Exchange - prime real estate. Trump secured a loan of $125 million (111.8 million euros) from the Frankfurt-based finance giant.
Since then, the two parties have cut many deals.
From friends to adversaries
In 2003, the bank helped Trump Hotels & Casino Resorts of Atlantic City with a fixed-income offering totaling $468 million to pay for his casinos on the Jersey Shore. The business later went belly-up after even its flagship gambling hall at the Taj Mahal failed to make a profit.
In 2005, Deutsche Bank lent Trump $640 million for the Trump International Hotel & Tower in Chicago. Deutsche Bank was eager to close the deal, probably for the $12 million fee it paid. As for Donald Trump, he went out of his way to accommodate the bankers, flying them to Chicago on his private jet to show off his plans for the project.
While the Chicago financing deal was desired by both Trump and the German bank, it was also the one that turned friends into adversaries.
According to the Wall Street Journal, Trump failed to pay $334 million on that loan in 2008 because of a lack of liquidity after the housing bubble burst. Instead, Trump sued Deutsche Bank, insisting that the financial crisis that hindered him was actually an “act of god” and should excuse him from paying on time.
He further sued Deutsche Bank for $3 billion, arguing that the bank's lending practices during the mortgage crises helped bring upon the very problems that were now hurting his balance sheet.
In return, Deutsche Bank countersued Trump for $40 million that it said the developer had personally guaranteed.
Forgive but don't forget
Both parties later settled, but the relationship soured. For many at Deutsche Bank, Trump became a persona non grata. But the bank's private client service was still open for business. It picked up where the other colleagues had left off, lending Trump another $125 million for his Doral Golf Resort and Spa in Miami.
The biggest play with the developer came in 2012 with the $950 million financing of Trump's skyscraper at 1290 Avenue of the Americas, once again a prime piece of New York real estate. Currently, Deutsche Bank is financially involved in Trump's development of the Old Post Office in Washington, D.C.
The sum of Deutsche Bank loans to Trump is a staggering $2.5 billion, not counting $1 billion in loan guarantees. Deutsche Bank is not only by far the biggest lender for the New York businessman - it's his only one. According to the Wall Street Journal, most US banks, including Citigroup, JP Morgan Chase and Morgan Stanley, have long stopped doing business with the developer, who is known not only for his success, but also for his failures and his business antics.