In the dark season, a little color is good, especially in the fashionably monotonous world of finance. At the digital Christmas party in December, Asoka Wöhrmann, head of the largest German investment company DWS, exchanged his suit for a Christmas jumper embroidered with snowflakes, gingerbread men and candy canes. “Happy Ho-Ho-Ho to you,” it said. His board colleague appeared in a pink sweater with a moose motif. Shortly before, Wöhrmann had shown himself to be hands-on at a “volunteer day” with a wheelbarrow when mucking out a nature farm for children. “Leadership by example,” it said, “so that children can enjoy nature.”
Away from such staging, however, the Deutsche Bank subsidiary is currently less cheerful: This Monday the Frankfurt Labor Court is dealing with whether the dismissal of the former DWS sustainability boss Desiree Fixler was lawful. It’s a case that has severely damaged DWS’s image and share price. And that goes far beyond Frankfurt asset management, since it raises the question of whether companies in Germany deal appropriately with critical whistleblowers.
When the American Fixler was kicked out in spring 2021 after just six months, DWS initially had implied, she lacked “traction”. There was no search for a successor at all: Wöhrmann simply made the topic of sustainability, the trend topic par excellence in the financial sector, a top priority.
Escalation to the US Department of Justice
Normally, if the chemistry isn’t right, companies part ways with managers, saving face for all sides. It was different with Fixler. Seeing her reputation destroyed, she turned to Das in the summer Wall Street Journal: She was fired after she pointed out incorrect information about sustainability funds in the annual report and urged improvements, she told the US newspaper. DWS rejected this. But barely four weeks later became knownthat, in addition to the US Securities and Exchange Commission, the strict US Department of Justice is also investigating the allegations. The stock market price of DWS collapsed by almost 15 percent, a billion euros market value was gone. To date, the stock has not fully recovered.
All of the information in the annual report is correct, according to DWS. The supervisors, however, seem to take the accusation seriously that the fund house has overdone its public image with the progress made in terms of sustainability. And even if this suspicion is not confirmed, there is still trouble: The US authorities believe that DWS should have reported Fixler’s allegations immediately. Regardless of whether they are considered justified in Frankfurt. Penalties are threatened for this alone, possibly even by the parent company Deutsche Bank. Since DWS went public at the end of 2018, she has held 80 percent of the shares and controls the supervisory board.
Most recently, he was the top earner in the Deutsche Bank group: DWS boss Asoka Wöhrmann.
(Photo: Hannibal Hanschke/picture alliance/dpa)
Former DWS boss Nicolas Moreau had prepared the IPO, his successor Wöhrmann took over in a hot phase – and should start with the newly won freedom. After a stint as Head of Private Clients at Deutsche Bank, he returned to DWS at the end of 2018. His career had started there, as a fund manager. As CEO, he delivered quickly, stopped the outflow of funds from the DWS funds and consistently cut costs. In March a year ago, Deutsche Bank then extended Wöhrmann’s contract prematurely until 2024. He had “done a great job since returning to DWS as CEO in autumn 2018,” said Karl von Rohr, chairman of the supervisory board and Deutsche Bank board member.
Wöhrmann was rewarded accordingly – despite the savings measures for the workforce. He was the last one top earners in the Deutsche Bank Group. In view of the good inflow of funds and the apparently achieved cost targets, he also benefits from a success fee. In 2019 he earned 7.6 million euros, in 2020 6.1 million euros.
Surprising exits, bad mood
Since the trouble with his ex-manager Fixler, however, he has been remarkably reticent, giving no interviews and hardly ever appearing in public. Things seem to be brewing behind the scenes: Wöhrmann, who was still courted and celebrated when he took office, has walled himself in within his closest management circle and does not allow himself to be criticized, several insiders report unanimously. Some executives have recently resigned. “The mood is so devastated that some are now leaving voluntarily,” says a former high-ranking manager. DWS does not want to comment on this. In the vicinity of Wöhrmann, however, it is said that there are also many new ones on board.
If you take a closer look, the success is not as great as it appears. “The fund subsidiary of Deutsche Bank is increasingly becoming an international giant with low margins,” wrote the Stock exchanges newspaper recently. Although more and more investor money is flowing into DWS, it is mainly in inexpensive index and money market funds. In order to survive in this low-margin business against the international giants of the industry, DWS would have to grow through a takeover. There are corresponding plans, but possible partners are rare. And Deutsche Bank might have to give up part of its control or even shares in its fund house – both of which don’t suit CEO Sewing because he needs the stable income.
Internal critics are getting louder
Critics in the house also point out that DWS owes its success less to “focusing on customer needs and its efficiency”, as it praises itself in the annual report – but above all to the sales power of Deutsche Bank, which offers the funds to its customers. “Basically, only Deutsche Bank and the exclusive partner Deutsche Vermögensberatung (DVAG) do business with DWS,” says an insider. This also applies to the sustainability funds.
The SZ has internal figures from the summer of 2021, according to which more than two-thirds of the new business actually came from the group. The rest went through DVAG. It is true that the competitors also sell their funds primarily through their own banks. If the funds are not doing so well on the open market, that does not necessarily speak for their quality. DWS does not want to comment on this. In group circles one contradicts: Sales via third-party partners are stronger, the dependency on the group is significantly lower.
A few days ago, DWS surprised the stock exchange with a mandatory announcement: the numbers are significantly better than originally expected. The final quarter of 2021 brought income of 798 million euros, a quarter more than in the fourth quarter of 2020. The good stock market situation at the end of 2021 increased income from management and performance-related fees significantly. Next Thursday, the fund company will then publish more details with the preliminary annual results. Then it will also be clearer to see whether the conflict with ex-manager Fixler has already left its mark.