Viceroy at odds with Sarb over Capitec

A WAR OF words has erupted between the US-based fund manager Viceroy Research group and the South African Reserve Bank (Sarb).

This after the Reserve Bank supported Capitec Bank in rubbishing claims made by Viceroy last week about Capitec operating as a loan shark and running into insolvency. In a 23-page document published by Viceroy last week, the research group called on the Sarb to place Capitec under curatorship. Instead, the Reserve Bank defended Capitec and said that, according to all the information available, Capitec was solvent, well capitalised and has adequate liquidity. The bank meets all prudential requirements.

Viceroy said yesterday in an update on its website that the Sarb had mistakenly decided to stake its reputation on the accuracy of Capitec’s accounts.

“The South African Reserve Bank has a responsibility to determine whether the information provided to them, and on which they base their regulatory decisions, is accurate. We do not think it is,” Viceroy said.

Capitec’s shares eased on the JSE yesterday in line with the other banking stocks. The shares closed 6.45 percent lower at R864.66 a share, down from Friday’s closing price of R924.27 a share.

Standard Bank fell 3.69 per- cent to R195.09. Nedbank eased 3.11 percent to R255.79, while FirstRand shed 2.76 percent to R64.57. Barclays Group Africa closed 1.06 percent lower at R180.07.

Viceroy said the Sarb had, at this point, a responsibility to perform a full regulatory inspection of Capitec.

“Viceroy remains firm in its belief that this will result in Sarb placing Capitec into curatorship.”

The Sarb last week was joined by National Treasury in slamming Viceroy.

It has requested that the Financial Services Board, as the market regulator, working with the JSE, should urgently consider whether it should initiate a market abuse investigation into the conduct of Viceroy Research and to ensure that it is regulated appropriately.

Another accusation by Viceroy is that Capitec on its analysis pointed to predatory lending practices by Capitec, where clients would be pushed to take out new loans to pay off the old ones, while being charged initiation fees and incurring other costs.

It was also questioned about its practice of rescheduling loans to clients.

In a statement released yesterday morning, Capitec said that “where clients have existing debt and were experiencing difficulties in repaying instalments or anticipated that they would experience difficulties, the bank would consider the merits to reschedule the debt based on prescribed criteria. The client is evaluated on specific rules to evaluate whether the client qualifies for the loan to be rescheduled.”

The bank said rescheduling supported the rehabilitation of clients by improving the collection potential on such financially stressed, or potentially financially stressed clients.

Viceroy promised that it would shortly respond to Capitec’s press release in relation to its report.