Sarb denies Capitec probe
The South African Reserve Bank (Sarb) has denied a Bloomberg news report alleging it requested an investigation into loan origination fees charged by Capitec Bank.
Shares in Capitec fell more than 5% during intraday trade after the report alleging Sarb had written to the National Credit Regulator (NCR) to request a probe into the origination fees charged by Capitec on its multi-loan product.
According to the report, the probe was spurred by reports by short-seller Viceroy Research.
“In its update to parliament on May 30, Sarb reported there are three main allegations in the Viceroy report. The first two deal with scheduled loans and the provisioning models, both of which are prudential matters, while the third issue deals with the continued use of multiloan products.
“This is a market conduct issue and falls within the responsibilities of the NCR. Sarb met with the NCR and requested the regulator take the matter forward,” Sarb said in a statement yesterday.
The multi-loan product was the subject of a legal dispute between Capitec and consumer advocacy group Summit Financial Partners, which alleged it was in contravention of the country’s credit laws. The parties recently reached an out-of-court settlement, while a previous NCR investigation cleared the product.
According to Viceroy Research, the dispute could have been used to trigger a multi-party litigation refund for which it believed the bank would be required to refund related origination fees to the tune of at least R12.7 billion. The bank has, on several occasions, refuted Viceroy’s claims and even published its own analyses, pointing out flaws in the short-sellers’ logic and methodology.
Capitec said it terminated the multiloan product in 2016 after rules introduced by the NCR meant it was no longer viable. But Viceroy said the lender rebranded it and that Capitec’s methods risked over-indebting consumers. Capitec denied this, saying Viceroy did not understand how the product worked.
The NCR had probed the multiloan facility and was satisfied with fees and interest charged, Capitec said in February.
Capitec has strongly refuted the Bloomberg report. “We have no knowledge of the investigation Bloomberg refers to and are in close and regular contact with Sarb and the NCR”.
It announced separately that ratings agency S&P Global raised its long-term credit rating to “zaAA” from “zaAA-” following a “revision of its criteria on national scale ratings and subsequent recalibration of the mapping table for South Africa”. – Moneyweb
Moneyweb
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