A Frankfurt court has struck down the dismissal of Commerzbank’s former Wirecard analyst Heike Pauls in a significant blow for the German lender.
Commerzbank fired Pauls in February after emails showed that she had briefed Wirecard management about criticism of the collapsed payment company that a hedge fund had shared with her.
She challenged the termination of her contract in court, which on Tuesday ordered Commerzbank to re-employ her, a court spokeswoman told the Financial Times. The court’s full judgment has not yet been published.
In the meantime, the German lender has decided to close its entire equity research department in an attempt to cut costs.
Commerzbank declined to comment. A lawyer for Pauls did not immediately respond to an FT request for comment. The business publication Wirtschaftswoche was the first to report the ruling.
Pauls’ victory highlights the difficulties of firing people in Germany, which has some of the strongest employment protection laws in the world. The legislation was seen as a disadvantage for Frankfurt in the competition for banks relocating from the UK to the EU after Brexit.
In an attempt to address this, the German parliament in 2019 tried to make it easier for banks to fire highly paid senior staff. Since then, a narrowly defined group of high-earning executives have been exempt from the laws.
However, this only includes senior staff at big banks earning at least €234,000 a year who are seen as “risk takers” whose decisions have a “material impact on the risk profile” of their employer. Equity analysts would typically not be deemed risk takers.
Pauls was one of the most bullish analysts commenting on Wirecard over a number of years. The Aschheim-based group filed for insolvency last summer after it disclosed that €1.9bn of corporate cash did not exist, in one of Germany’s biggest postwar accounting frauds.
Pauls recommended buying shares in the group right up until its insolvency. In early 2019, she called a Financial Times report about whistleblower allegations “fake news”. Commerzbank later retracted that research note and apologised for the wording.
In early 2021, an email by Pauls emerged showing that in 2016 she shared information gathered during a call with Greenvale Capital, a London-based hedge fund, with Wirecard’s then chief financial officer Burkhard Ley and Iris Stöckl, who was the group’s head of communications.
In March, Pauls defended her actions in testimony to a German parliamentary inquiry into the scandal, arguing that she was one of the many victims of the Wirecard fraud. “It is an analysts’ job to sell ideas. Wirecard was one of my strongest recommendations,” she said.
