The former head of western European sales and later CFO at BMW, who joined Deutsche in 2008, certainly needed one after the investor call he had to give in mid-December on likely hits to the bank’s fourth-quarter earnings.
Krause updated investors on the bank’s shunting of €122 billion of assets into a new non-core operating unit. "This is not a bad bank," he clarified, after Deutsche had warned investors that fourth-quarter results will be affected by "negative impacts from de-risking and valuation adjustments to certain of our assets".
Before getting into the details, Krause was forced into a long digression over reports of allegations made to US regulators by two different employees – a former trader in spring 2010 and a market risk manager in March 2011 – that Deutsche had mis-marked positions in its bespoke credit correlation book during the financial crisis and also mis-valued associated collateral to disguise the true extent of its losses.
"Let me now give you some facts," Krause volunteered before launching into a long account of the bank’s response to the allegations, the gist being that Deutsche had clearly done nothing wrong, because the outside law firm it hired to investigate said so and its external auditors agreed.
"These claims were historical; the individuals did not make them at the time of the conduct they alleged was improper but rather years later and these individuals did not have responsibility for or personal knowledge of the facts concerning these issues," Krause asserted.
Then, for any investors still following, there was something about Deutsche establishing valuations through a "customized proprietary model designed to value the unique composition of that book".
Krause showed no signs of worrying that his own credibility might be in doubt: a sound effort for a man who had had to start the call with observations on police raids at the bank’s offices that very morning over an alleged VAT fraud relating to trading of carbon emission certificates. He had to admit that the Frankfurt public prosecutor’s office had named Krause himself, as well as Deutsche’s co-chief executive Jürgen Fitschen, in the investigation as they had signed the 2009 VAT return.
Any questions on that profit warning?
"This is not seen as a profit warning," insisted Krause. "Rather, it is guidance that we have potential effects in the fourth quarter. The outcome is still open but we will have a large number of things that could be substantial in nature... and could lead to a loss."
Poor Krause. It was never like this when he was selling cars.