Capitec clients remain loyal
OVER 8 000 NEW ACCOUNTS WERE OPENED ON TUESDAY, SAYS CEO It is our view that Capitec has been prudent in managing its lending book, says Futuregrowth Asset Management.
National Treasury called for an international probe into short seller Viceroy Research over its allegations against Capitec Bank, as the lender said customer numbers were stable.
The Financial Services Board must alert regulators like the Securities and Exchanges Commission in the US and the UK’s Financial Conduct Authority to consider whether Viceroy is regulated appropriately, Treasury said. Authorities should check whether Viceroy “transgressed any of their market conduct and market abuse laws that aim to protect investors”.
Capitec’s stock gained the most in two years on Thursday, ending four days of losses that wiped 25% off its market value as concerns over Viceroy’s report eased. The three-person firm led by a former UK social worker and two young Australians on Tuesday accused the lender of refinancing defaulted loans with new debt. The bank described the analysis as one-sided and inaccurate and laid a complaint against New-York based Viceroy with the country’s stock-market regulator.
“Initially, there were some jitters, but it quickly stabilised and clients are very supportive of the bank,” Capitec CEO Gerrie Fourie said. “We opened more than 8 000 new client accounts on the same day after the news broke.”
The “reckless way” in which Viceroy released its report on lender Capitec is proof that it’s not acting in the public interest nor in the interest of financial stability in SA, Treasury said. Viceroy “stood to benefit substantially from forcing the Capitec share price to fall by publishing its speculative report about the bank,” it said.
Viceroy had made a short bet on Capitec’s stock, founder Fraser Perring said in an interview with Bloomberg TV on Tuesday, meaning it would profit from a decline in the share price.
While analysts at Deutsche Bank AG and Arqaam Capital have suggested Capitec allow for an independent investigation to put the allegations to rest, the lender’s CEO said this isn’t being considered.
Capitec is “100% confident” it won’t need to restate its finances, said Fourie, who bought stock on Wednesday after the price declined. The bank will respond further to Viceroy’s allegations “as soon as information becomes available in the next few days.”
The SA Reserve Bank said this week it has no evidence to suggest the lender’s stability is in question; S&P Global Ratings said its assessment of Capitec is unaffected by the Viceroy report or subsequent market reaction.
National Treasury is satisfied Capitec is well-capitalised, liquid and solvent. Futuregrowth Asset Management also said Capitec is adequately provisioned and that it will continue to be one of the lender’s funding partners.
“Capitec is a healthy alternative lender, and our research has not caused us to be concerned about their solvency.” – Bloomberg