Stefan Hoops, CEO of the Deutsche Bank subsidiary DWS, was recently in the USA again, visiting customers, colleagues and friends. Apparently it got political. It was about the big issues that move the USA, abortion ban, gun law and corona vaccinations. He respects all of these debates, Hoops said, but one shouldn’t give too much weight to these divisive issues. Only politicians and television stations benefited from black-and-white thinking.
You know that because he told the world about it on the LinkedIn careers network, the platform for managers who want to communicate. Hardly a week goes by in which Hoops does not let his followers participate in his everyday managerial life. Sometimes it’s just about the company’s quarterly figures, sometimes it’s about his old expander, which he takes with him on every business trip. But often also about political theses.
Hoops recently became head of Germany’s largest fund company, leading one of Deutsche Bank’s most important revenue generators, where millions of Germans have their assets managed – and he may even become the next Deutsche Bank boss. At least when he masters his new job. Many trust him.
Hoops is loud, but DWS urgently wanted to be quieter
The 42-year-old was catapulted into the DWS executive chair almost overnight in June, it is the preliminary high point of a steep corporate career. Previously, he was responsible for corporate customers at Deutsche Bank, a business that CEO Christian Sewing had declared to be a core topic. Hoops has probably not quite met expectations – strong profit growth. But that didn’t stand in the way of his promotion, nor did the fact that the long-standing investment banker had moderate knowledge of the fund business.
Stefan Hoops took over the top position at DWS after the Annual General Meeting on June 9th.
(Photo: Deutsche Bank AG/picture alliance/dpa)
Perhaps it was simply because he had already received nothing during the previous board restructuring. Or because he is considered a confidante of Sewing and, as early in his professional life, was simply loud enough.
DWS urgently wanted to be quieter. It was the penchant for blatant marketing that caused the Frankfurters to embark on a tangible greenwashing scandal. The question is whether the fund company cheated on green investment products. A whole handful of authorities, from the US stock exchange regulator SEC to the Frankfurt public prosecutor’s office, are examining the allegations made by former sustainability chief Desirée Fixler: In the summer of 2021, she accused her ex-employer, among other things, that DWS had given false information in its annual report the group denies. When the official tests became known a few weeks later, DWS lost a billion euros in market value in one fell swoop. And after a raid by the public prosecutor’s office last May, former CEO Asoka Wöhrmann had to go.
And it remains restless. This Tuesday, the environmental organization Greenpeace protested in front of the company’s headquarters, activists held banners with the accusation “DWS is financing the climate crash!” high and presented data according to which the climate impact of the DWS funds far exceeded the 1.5 degree target. A civil lawsuit brought against DWS by the Baden-Württemberg consumer advice center became known on Monday: It accuses the company of “misleading advertising for allegedly sustainable investments”. DWS also had this rejected by a spokesman.
The reputation has suffered badly
Even if nothing illegal is found in the end and nothing sticks in terms of competition law: the reputation is scratched. Ironically, when it comes to the future topic of “sustainable” finance.
So Hoops has a lot of convincing to do. Does his increased need for communication possibly help him? The regular Linkedin posts have already become a whispered topic in the financial center of Frankfurt. Even on the top floors of Deutsche Bank, there are fears that things could get out of hand. Any statement can move the stock price or violate banking secrecy. Political issues can alienate customers.
Some in the house are now wondering whether Hoops shouldn’t focus more on customers and products than on social media. Or about closing technical gaps. When his very first quarterly figures were published, he even exchanged blows with the former head of sustainability on Linkedin and did not necessarily emerge as the winner. The American even accused him of anticipating the investigation. The exchange made it into the Headlines in the international financial press. And in the corporate headquarters, some held their breath.
The greenwashing allegations are just one of many problems
He just likes to share his thoughts with other people and gets a lot of positive feedback, says Hoops. Timing is not a problem, he writes his posts during morning strength training, between quarter to six and quarter to seven. There are breaks between each exercise. Then the legal, compliance and communications colleagues took another look at it.
He really doesn’t have the time during the day to work as a hobby publicist. The greenwashing allegations are not the only challenge. For example, there is the unstoppable growth of passive funds (ETFs) that track stock market indices. They are popular with investors, but hardly make a profit. Although DWS is active in this area, it is tiny compared to capital collection giants such as Blackrock or Vanguard. Last but not least, the fund company urgently needs to grow and become more independent. But there is no money for this, which the parent company does not have either. Although DWS has been formally independent since its IPO in 2018, it is still 80 percent owned by Deutsche Bank. Most recently, the institute drew the daughter closer to itself: Hoops is just one of several top managers who left the group.
Hoops – who has a degree in business administration – is actually a trader, investment banker from the trading room, where the tone is often rough and it’s about quick deals and high bonuses. With well-trained upper arms, a neat short haircut and an expensive watch on his wrist, Hoops also corresponds visually to the Wall Street banker cliché. At the beginning of his career, almost 20 years ago, he made it onto the trading floor of Deutsche Bank in New York. At the beginning of the financial crisis, he pushed complicated products onto the market, subprime securities, which later led to large losses for customers. “He used to call his customers every day, he sold tons of the stuff,” says a former colleague. Another says: “He really wanted to go up, he was always extremely hardworking and very adjusted.” At a football World Cup, he once gave his bosses football shirts for the German national team, printed with their names. Cricket fan Anshu Jain, then head of the investment bank, was also considered.
His lack of expertise in the funds business could be an advantage right now
Today, when talking about the excesses in investment banking, Hoops appears to have come clean. “One of the mistakes in the entire industry was the organized non-responsibility of individuals, I learned from that,” he says in a small circle. At DWS, he always makes sure to clarify who is responsible for a project “so that the responsibility doesn’t get blurred”.
The fact that he is not originally a fund expert could also be an advantage, say some who see the change as a positive thing because he is more likely to question what has become stuck. Now Hoops first wants to get the sustainability issue under control, “restore credibility,” he wrote to the workforce last week. With a new management structure, he wants to ensure, for example, that the fund managers actually use the available sustainability data. On this terrain, the DWS should just be “the flag bearer” again. As if he had already foreseen the Greenpeace protest.