The language was scathing, the tone sarcastic. “[Donald] Trump proclaims himself the archetypal businessman, a deal-maker without peer,” the memo said.

It mentioned Trump’s boast that he was worth “billions of dollars”. And it listed his interests in “numerous extraordinary properties” across the world, from New York to Panama, not to mention his latest golf course in Scotland.

Another document noted: “Trump is no stranger to overdue debt.”



The angry memos were written by lawyers acting on behalf of Deutsche Bank, Germany’s biggest lender, which was suing the billionaire.

It was November 2008. Three-and-a-half years earlier the bank had loaned Trump the cash to build one of his grandest projects yet: a hotel and mega-tower in Chicago.

Trump had given his personal guarantee he would repay the $640m. As per agreement, he was now due to hand over a large chunk, $40m.

There was only one problem: the future 45th president of the United States was refusing to pay up. Deutsche initiated legal action. Trump responded with a blistering, scarcely credible writ of his own, a 10-count complaint in New York’s supreme court, in the county of Queens.

In it, Trump adopted a highly unusual defence, known as “force majeure”. He claimed that the 2008 economic crisis was a “once-in-a-century credit tsunami”, an act of God that was equivalent to an earthquake.

Since it couldn’t have been anticipated, and it wasn’t his fault, he wasn’t obliged to pay Deutsche anything. It wouldn’t get the $40m or the outstanding $330m, his writ said.



He went further. Trump claimed Deutsche Bank had actually helped cause the crunch. Therefore it owed him. Trump demanded $3bn from Deutsche in compensation.

Its New York property division first loaned money to him in 1998 at a time when the bank was attempting to expand its commercial real estate portfolio. By that stage, other major banks were becoming cautious about Trump, in part, the Wall Street Journal has said, because of frustration with his business practices.

A decade later, Deutsche was to find out for itself quite how capricious and unpredictable he could be.

In the 2008 suit the bank’s unhappy lawyers quote from Trump’s book Think Big and Kick Ass in Business and in Life. On his struggle with banks in the 1990s, Trump writes: “I figured it was the banks’ problem, not mine. What the hell did I care? I actually told one bank, ‘I told you you shouldn’t have loaned me that money’.”



At the same moment Trump was suing Deutsche he was telling the Scotsman newspaper he was a very rich individual, with a “billion in cash”. He was willing to spend it on his latest project: a golf course and hotel near Balmedie in Aberdeenshire. Controversially approved by then first minister Alex Salmond and the Scottish government, it would be the “world’s greatest golf course”, Trump said.

It was what happened next that strikes many in the banking world as unusual – bizarre, even. In 2005 Trump had borrowed money from Deutsche’s commercial real estate division. In 2010 the parties settled their legal differences.

But rather than walking away, the bank’s private wealth division then resumed lending to Trump, the troublesome four-times bankrupt client who had defaulted on a major loan.

Why? It’s unclear what assurances Trump offered. He had given his word before, only to break it.

Trump at his golf course in Balmedie in 2011. Photograph: Murdo MacLeod/The Guardian

Deutsche has refused to discuss its lending arrangements to the first family. Its clients also include Trump’s daughter Ivanka, her husband, Jared Kushner, and Kushner’s mother, Seryl Stadtmauer.

Kushner is a senior White House adviser. Just before the US election Deutsche refinanced $370m he owes against commercial property in Manhattan belonging to Kushner’s company.

Sources inside Deutsche say the investment banking side of the business is entirely separate from the private bank that handles the Trumps. Personal relationships also play an important role in private banking.

Even so, banking experts have told the Guardian it is unusual for a private bank to take on such loans, and unbelievable that a bank would continue to deal with a man who had refused to pay his debt, and then countersued using force majeure.

One former Deutsche employee, based in New York, said: “Real estate refused to deal with him [Trump]. Only the private bank is willing to accept personal guarantees.”



In the years since then, Deutsche Bank has been hit by scandal after scandal. It was fined more than $630m for failing to prevent $10bn of Russian money laundering – and has paid $7.2bn to settle a decade-old bond mis-selling scandal.

No wonder, then, that the bank that likes to say yes to Donald Trump thought it best to have a proper review of its arrangements with him following his unexpected win in the US presidential election.

Deutsche has carried out a close internal examination into its lending to the president. The aim: to see if there were suspicious and potentially embarrassing connections to Vladimir Putin’s Russia.

The review began last year, when Trump became a politically exposed person (PEP). In recent weeks Deutsche has fielded numerous calls from the media on a possible financial trail to Moscow.

The examination failed to find any evidence of this, according to a person familiar with the matter. Deutsche’s links to Russia have been under the spotlight since a money laundering scheme was exposed last summer by the New Yorker magazine.

The “mirror trades” scandal saw Deutsche brokers in Moscow buy stocks in roubles on behalf of a Russian company. Simultaneously another firm, registered offshore, would sell the same amount of stock in dollars, pounds or euros. The scam allowed the bank’s Russian clients to turn money in roubles, much of it dubious, into dollars abroad.

The scheme’s alleged mastermind was Tim Wiswell, an American trader subsequently fired by Deutsche. According to an FCA report Wiswell, who was head of the Russian equities desk in Moscow, received about $3.8m in bribes via his girlfriend. These were paid into offshore accounts in Cyprus and the British Virgin Islands.

Deutsche has not identified the Russian customers who used the scheme. Wiswell’s lawyer, Ekaterina Dukhina, refused to comment.



Under its former CEO, Josef Ackermann, Deutsche Bank developed close connections with the Russian state. In 2006 Deutsche’s Moscow branch hired Andrei Kostyn, the son of Andrey Kostyn, the head of VTB, Russia’s state bank. Kostyn Jr generated much of the bank’s Moscow profits until his death in 2011 in a snowmobile crash. Deutsche carried out an internal investigation into the “mirror trades” scandal codenamed Project Square. The bank scaled down its Moscow activities and transferred some clients to VTB.

To what extent – if any – was Deutsche’s Moscow operation compromised? Did the clients have Kremlin connections? We don’t know.



Meanwhile, Democrats are piling on the pressure.

Joe Crowley, chair of the House Democratic Caucus, said: “President Trump’s web of global financial entanglements are of serious concern. When a foreign-owned bank that is under investigation by the Department of Justice holds hundreds of millions in personally-guaranteed debt for the president, that is problematic for ethical, diplomatic, and judicial reasons. This is why we must know more about all of Donald Trump’s business ties.”

Crowley also said he wanted the president to release his elusive tax returns.

Deutsche has not explained why it continued to bankroll Trump and his real estate deals. Even before the 2008 legal dispute, Trump’s chequered business record was infamous. Other financial houses in New York refused to give him credit, following a string of failed ventures including an airline and a casino empire in Atlantic City.



Bloomberg reported that Deutsche was now trying to restructure Trump’s $300m debt, which is guaranteed by four of his properties. The difficulty is obvious: conflict of interest. The president owes the bank money. At the same time the Trump administration and its Department of Justice is investigating Deutsche over its Russian money laundering scheme.



Trump remains the bank’s most high-profile client. He is also, increasingly, its biggest PR headache.

Additional reporting by David Pegg