Against this opaque backdrop, Deutsche Bank seems to be tripping over its own toenails. I admit that during the financial crisis I was one of the few journalists who was critical of the good ship DB. I didn’t like the fact that shortly after Lehman’s collapse, Deutsche posted a surprise third-quarter profit by reclassifying some €25 billion of trading assets under new accounting rules. I also couldn’t understand how a house that had been so big in complex derivative products did not need to raise more capital – although Deutsche did eventually raise capital in late 2010 in association with the takeover of Deutsche Postbank.
During the past few months, a torrent of bad publicity has engulfed the German bank. Three former employees alleged to US regulators that Deutsche Bank traders, with the connivance of senior executives, failed to recognize up to $12 billion of paper losses during the financial crisis and that these "marks" helped the bank avoid a government bailout. Deutsche has insisted that such allegations are "wholly unfounded". Nevertheless, mud might stick. The Financial Times ran a ferocious analysis piece entitled: "Deutsche Bank: show of strength or a fiction?" The article concluded: "But the three former employees told the SEC that ...