Head of Deutsche Bank’s DWS steps down after ‘greenwashing’ raids

The brand new emblem of Deutsche Financial institution’s DWS Asset Administration is pictured at their headquarters in Frankfurt, Germany, March 19, 2018. REUTERS/Ralph Orlowski/File Picture

FRANKFURT, June 1 (Reuters) – The chief govt of high German asset supervisor DWS (DWSG.DE) will step down subsequent week, he stated on Wednesday, a day after raids by prosecutors over allegations that the corporate misled buyers about “inexperienced” investments.

The raids and departure of DWS CEO Asoka Woehrmann mark one other setback for Deutsche Financial institution (DBKGn.DE), DWS’s majority proprietor, which has been attempting to maneuver on from regulatory breaches, together with cash laundering and securities misselling, resulting in billions in fines.

DWS has been dogged by the accusations for months, prompting German prosecutors to raid DWS and the headquarters of Deutsche Financial institution on Tuesday. learn extra

German and U.S. officers have been investigating experiences and a whistleblower’s allegations that DWS had exaggerated the inexperienced credentials of investments it offered – a follow often called greenwashing. DWS has repeatedly denied that it misled buyers.

The DWS’s high administration change had been within the works for a while however was in the end made at conferences late on Tuesday within the wake of the raids, an individual with direct information of the matter stated.

Woehrmann advised workers in a memo that it was a pleasure to see DWS flourish however that “allegations …, nevertheless unfounded or undefendable, have left a mark”.

“To cite Charles Dickens: it was the most effective of instances, it was the worst of instances,” he stated within the memo, which was seen by Reuters.

Deutsche Financial institution, which retained majority possession of DWS after its preliminary public providing, has marketed itself as financial institution firms can flip to as they search a greener future.

Desiree Fixler, the whistleblower concerned within the investigation, advised Reuters that the resignation was optimistic but it surely didn’t go far sufficient.

“It is not only a one man change,” she stated.

“There’s the greenwashing, and there is the quilt up. It is an enormous tradition situation at Deutsche Financial institution,” she stated.

DWS and Deutsche Financial institution declined to touch upon Fixler’s remarks.

UNCERTAINTY

On Tuesday German prosecutors stated that “adequate factual proof has emerged” to point out that environmental, social and governance (ESG) elements have been taken under consideration in a minority of investments “however weren’t taken under consideration in any respect in a lot of investments”, opposite to statements in DWS fund gross sales prospectuses.

The U.S. Securities and Trade Fee and German monetary watchdog BaFin final yr launched separate investigations into the whistleblower allegations.

The whistleblower, Fixler, a former head of sustainability at DWS, had stated the corporate overstated the way it used sustainable investing standards to handle investments.

In February, Deutsche Financial institution agreed with the U.S. Division of Justice to increase the keep of a particular monitor on the financial institution after it did not report allegations involving DWS in a well timed method. learn extra

Shares in DWS have slumped 24% because the SEC and BaFin investigations have been made public in August final yr. They have been down about 5% late on Wednesday.

The accusations present “greenwashing isn’t a trivial offence,” stated Magdalena Senn of the German shopper advocacy group Finanzwende.

“The raid and the resignation can have a sign impact for different asset managers,” she stated.

Credit score Suisse analysts stated Woehrmann’s departure was a disappointment as a result of he efficiently carried out reform and turnaround at DWS.

“We see the change of management heralding a interval of uncertainty for DWS’ technique – and will even elevate questions over its future as an unbiased asset administration firm,” Credit score Suisse stated.

DWS and Deutsche Financial institution on Tuesday stated that the asset supervisor had cooperated with regulators and authorities prior to now and would proceed to take action.

UNDER PRESSURE

Woehrmann has been below strain on a number of fronts because the greenwashing allegations broke.

Deutsche Financial institution performed an inner investigation into Woehrmann’s attainable non-public e mail utilization for enterprise functions, and the European Central Financial institution additionally seemed into company governance points surrounding him.

He additionally obtained threatening letters, together with one in December with pink crosshairs, white powder and a racial slur. learn extra

When requested in regards to the allegations in a DWS earnings name with analysts, Woehrmann stated he emphatically rejected all of the allegations.

Deutsche Financial institution CEO Christian Stitching publicly backed Woehrmann in January, and on Wednesday thanked him for “his spectacular work and efficiency”.

Stefan Hoops, who has been overseeing Deutsche Financial institution’s company banking division since 2019, will exchange Woehrmann from June 10, the financial institution stated.

Woehrmann’s resignation takes impact on June 9, the day of its annual normal assembly.

Reporting by Paul Carrel, Tom Sims and Frank Siebelt; Extra reporting by Anna Pruchnicka
Modifying by Bradley Perrett, David Goodman, Jane Merriman and Sabine Wollrab

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