The scandal-hit bank that loaned hundreds of millions of dollars to Donald Trump has conducted a close internal examination of the US president’s personal account to gauge whether there are any suspicious connections to Russia, the Guardian has learned.
Deutsche Bank, which is under investigation by the US Department of Justice and is facing intense regulatory scrutiny, was looking for evidence of whether recent loans to Trump, which were struck in highly unusual circumstances, may have been underpinned by financial guarantees from Moscow.
The Guardian has also learned that the president’s immediate family are Deutsche clients. The bank examined accounts held by Ivanka Trump, the president’s daughter, her husband, Jared Kushner, who serves as a White House adviser, and Kushner’s mother.
The internal review found no evidence of any Russia link, but Deutsche Bank is coming under pressure to appoint an external and independent auditor to review its business relationship with President Trump.
Democratic congressman Bill Pascrell Jr, a member of the House Ways and Means committee, said: “We know that Deutsche Bank is a major lender to President Trump, and the firm is also currently undergoing scrutiny by the Department of Justice for alleged misconduct.
…Pascrell said the bank was under federal investigation for aiding Russian money-laundering - a “troubling potential conflict”. He said he would encourage Deutsche to “shine a bright light” on its lending to the president to “eliminate any speculation of wrongdoing ”. Congress should also be allowed to review Trump’s tax returns in closed session, he added.
A source familiar with Deutsche Bank’s internal review said it came after Trump’s bid to become US president made him a politically exposed person. Under banking regulations, PEPs undergo tougher scrutiny than regular clients because of their proximity to government.
After Trump’s victory in the US election in November the bank “double-checked” its records, the source said. The bank has also fielded numerous media inquiries about recent Trump loans, which were viewed as unorthodox among some bankers familiar with the transactions.
According to an analysis by Bloomberg, Trump now owes Deutsche around $300m. He has four large mortgages, all issued by Deutsche’s private bank. The loans are guaranteed against the president’s properties: a new deluxe hotel in Washington DC’s old Post Office building, just round the corner from the White House; his Chicago tower hotel; and the Trump National Doral Miami resort.
In recent years the disgraced bank has been hit by a series of scandals. Last month the UK and US imposed record fines of $630m. Deutsche failed to prevent money laundering by its Moscow branch involving at least $10bn of Russian cash, regulators found.
Deutsche’s client relationship with Kushner was made public in a 2013 article in the New York Observer, which Kushner owned. Ivanka Trump, who formerly served as an executive in Trump’s real estate business, is also a client of Deutsche. She now works as an unofficial adviser in the White House.
Kushner’s mother, Seryl Stadtmauer, is also a client, according to a person familiar with the matter. The bank’s internal review looked at the president’s accounts as well as his wider family, it is understood.
The bank said it would not be drawn on what had prompted the internal examination, who had undertaken it or what its findings had been.
Deutsche said it would not say anything about whether the review had found any links between Trump’s loans and Moscow. However, two bank sources have told the Guardian that it found no evidence to show the loans had been underwritten by money from Moscow, or any Russian bank.
Trump and his businesses have a long history with the German bank, which this month posted its latest net loss, of €1.4bn. It has been the only financial institution willing to lend Trump significant sums. In the 1990s other Wall Street banks, which had previously extended him credit, turned off the tap after Trump’s businesses declared bankruptcy four times.
In November 2008 the German bank took the unusual step of suing Trump after he failed to repay $40m of a $640m real estate loan. Trump countersued. The tycoon argued that Deutsche had contributed to the global recession, which had depressed property prices. He demanded $3bn in damages.
Deutsche’s astonished lawyers described Trump’s lawsuit as frivolous and demanded immediate payment. The two parties settled in 2010.
The bank then quietly re-established its relationship with Trump via Deutsche’s private bank. The private wealth division deals with ultra high-net worth individuals, typically with assets in excess of $50m.
A person familiar with the matter said the relationship resumed because Deutsche Bank hired a group of private wealth bankers including Rosemary Vrablic, who had previously worked at Citigroup and Bank of America and was Trump’s personal banker. Vrablic began working for Deutsche in 2006.
When he was questioned about his bona fides on Wall Street by the New York Times, Trump referred to Vrablic as the “boss” of Deutsche Bank, although she is not the group’s chief executive. A glowing profile of the banker appeared in Kushner’s New York Observer.
Sources in the banking world have expressed astonishment that Deutsche would continue lending to Trump in the wake of his $3bn 2008 lawsuit. …
One person familiar with the matter said there was no interaction between the investment banking department that had originally lent to Trump and private banking. The investment bankers who dealt with Trump’s loans had left the company, the source said.
Possible links with Russia are a matter of acute sensitivity inside the bank, the Guardian has been told. The Trump administration has been fighting accusations contained in a dossier by a former MI6 officer that it secretly colluded before the US election with Russia’s president, Vladimir Putin. Trump has rubbished the claim as fake news.
On Monday the Michael Flynn resigned as US national security adviser after it emerged he had lied to the vice-president, Mike Pence, over his conversations with Russia’s ambassador to Washington. Flynn had discussed the possibility of the incoming Trump administration lifting Russian sanctions.
Citing current and former US intelligence officials, the New York Times reported on Wednesday that three members of Trump’s team had been in contact with senior Russian intelligence officers before the US election.
In January a US regulator, the New York Department of Financial Services, fined Deutsche Bank $425m for laundering around $10bn of Russian money. The UK’s Financial Conduct Authority imposed a £163m fine, its largest ever.
The US Department of Justice is still investigating the Russian scheme. In December Deutsche agreed to pay the department $7.2bn. The fine related to the mis-selling of residential mortgage-backed securities and other activities during 2005-7. The US originally asked Deutsche to pay $14bn.