Trump Gets a ‘Haircut’ and His Net Worth Plunges

William FurneyOct 18, 2023

Minute Read

Former president Donald Trump might like to think he’s worth many billions of dollars, but a bank gave him a “haircut,” and he’s now worth considerably less than he thinks.

Trump’s Reported Net Worth

The 77-year-old, who is campaigning for the White House again, believes he has around $4.26 billion — or at least that’s what he told Germany’s Deutsche Bank. Trump’s self-valuation is based on his vast property holdings that including hotels, golf courses, and luxury apartment buildings.

A German ‘Haircut’

But Deutsche Bank doesn’t agree with the former president’s assessment of his worth and has given him a “haircut,” meaning the value of an asset used as collateral in order to get a loan is lowered. The bank puts Trump’s net worth at nearly half his estimate — $2.365 billion.

New York Fraud Trial

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The dramatic fall in the value of Trump’s holdings was revealed at a fraud trial in which he, his adult sons, and senior executives at the Trump Organization are defendants. Prosecutors say they inflated the size of their property portfolio to get cheap loans from financial institutions, including Deutsche Bank.

Prosecutor’s Line of Questioning

Kevin Wallace, a prosecutor in the case, asked former Deutsche Bank Risk Manager Nicholas Haigh to explain the bank’s “haircut” it gave to Trump.

“A haircut is a way by which the bank reduces the stated value of the asset in order to form some kind of assessment of what it might be worth,” in case of a default on a loan, Haigh, a witness for the prosecution, said.

Trump and Deutsche Bank

Trump had a long relationship with Deutsche Bank, obtaining loans to fund his property businesses; it had been his biggest lender. But the bank cut ties with Trump in 2021 following riots at the US Capitol in Washington, DC, after Trump the 2020 election to Joe Biden and urged his supporters to gather there in protest at what he called a “stolen” ballot. Violence broke out and five people died. At the time, Trump reportedly owed Deutsche Bank around $340 million.

Multimillion-Dollar Financing

Deutsche Bank said it provided the Trump Organization with hundreds of millions of dollars in financing so Trump could expand his property empire. It gave him $125 million to get Trump National Doral Miami golf resort off the ground, $107 million to build the Trump International Hotel & Tower in Chicago, and $170 million to convert the Old Post Office in Washington, DC, into a luxury hotel.

Bank ‘Made Millions’

Trump lawyers say their client was aware of the haircut but that the Deutsche Bank nonetheless lent to him and made millions of dollars from interest payments on the loans. But prosecutors in the fraud trial argue that the bank would most likely not have agreed to loans if they had been provided with valuation figures that were not correct.

Trump Licenses Revoked

The trial has already found that fraud was committed by the defendants and the judge has revoked some of the Trump Organization’s licenses to operate in New York City. Prosecutors are pushing for a fine in the region of $250 million.

Trump’s ‘$200m Penthouse’

The court in New York has also heard that executives at the Trump Organization exaggerated the value of Trump Tower in the city by $20 million, because their boss was a celebrity and that, they claimed, added significant value to the property. Trump has claimed his penthouse in the building was 30,000 square feet but is actually one-third the size, prosecutors said, alleging that Trump had falsely claimed the residence was worth $200 million.

New York Gag Order

Judge Arthur Engoron, who is overseeing the New York fraud trial, has slapped Trump with a gag order, after the former president attacked one of the judge’s senior clerks on social media. “Personal attacks on members of my court staff are unacceptable, not appropriate, and I will not tolerate them,” said the judge.

Many Legal Hurdles

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While the proceedings in New York are civil, Trump is facing federal charges relating to the 2021 rioting in the Capitol as well as allegations that he removed confidential government documents from the White House after losing the 2020 election and stored them in various rooms at his Mar-a-Lago resort in Florida. Prosecutors allege the former president illegally shared information in the papers with other people.

Favorite Republican Runner

But Trump’s legal headaches have done little to dent his popularity among Republican voters, and he remains the leading candidate to win the GOP’s nomination for the 2024 presidential election. Polls show Trump with about 60% of voter support compared to 10% and less for his rivals, including Florida Governor Ron DeSantis.