It is still unclear what the consequences of the greenwashing allegations made by a former employee of Deutsche Bank subsidiary DWS last year will be. Does the group have to pay a fine because the fund subsidiary may have given false information in the annual report? Time will tell. But it is now clear that the US authorities are dissatisfied with the way Deutsche Bank informed them. This is what emerges from Deutsche Bank’s annual report, which was published on Friday. Accordingly, the US Department of Justice (DOJ) determined at the end of February that the bank not only reported the allegations too late. You also violated reporting obligations as part of a settlement that the bank had concluded in early 2021 on another matter. Now a special supervisor, i.e. an external law firm, will “expand their mandate” in order to continue to see that things are right in Frankfurt.
What sounds like a trifle is extremely uncomfortable for Christian Sewing. The CEO repeatedly emphasizes how much the relationship with the supervisors has improved during his tenure since 2018. In January 2021, Sewing cleared up further legal legacy issues in the United States with a settlement in another matter, but at the same time promisedto promptly report potential compliance issues or serious grievances from senior management to supervisors, whether or not the bank believes them to be legitimate. That sounds pretentious, but it is so common. Deutsche Bank does business in the USA and therefore has to comply with the rules there.
The allegations made by the former head of sustainability at the fund company DWS a year ago were quite serious: in an e-mail to DWS supervisory board chairman Karl von Rohr and Deutsche Bank sustainability head Jörg Eigendorf, she had warned that the group’s fund subsidiary could be wrong provided information on sustainability. And apparently because she addressed these things, she was fired a few days earlier. The US Ministry, however, reportedly only heard about the events from the Wall Street Journal found out after the manager contacted the newspaper over the summer. As a result, the US authorities and the German financial regulator Bafin launched an investigation.
As the annual report on Friday also stated, the DOJ has now expanded the existing monitoring by an independent auditor due to the violation. It would be about “certifying” the implementation of internal controls. In addition, the DOJ has “all rights reserved” to take further action in relation to the settlement. It is now also possible “that Deutsche Bank will be prosecuted or subjected to other measures,” as stated in the DWS annual report. Has the money house failed to report further complaints to the DOJ? The bank declined to comment on this.
A total of 520 employees earn more than one million euros
The annual report not only provides insights into legal disputes, it also contains details about the remuneration of the bankers: As expected, the workforce will receive higher bonuses for 2021 after the bank made a profit again. Overall, the money house pays around 2.1 billion euros and thus 14 percent more “variable remuneration” than a year earlier. The majority of this was accounted for by the approximately 7,000 employees of the investment bank.
The income millionaires are also still well represented in the bank: a total of 520 employees still receive remuneration of more than one million euros (previous year it was 614), at least four of them earn more than Sewing. The highest endowment is between ten million and eleven million euros. In a European comparison, Frankfurt has by far the most income millionaires in its ranks. The board also gets more: the managers together receive around 66.5 million euros. Sewing’s remuneration rose within a year from around 7.4 million euros to a good 8.8 million euros. Some of these sums will only be paid out later and depending on business success.