Reserve Bank backs Capitec again
SARB rubbishes Viceroy allegations, assures MPs of adequate capital and liquidity
THE Reserve Bank has restated its belief that the key allegations made against Capitec in the report by short-seller Viceroy are not correct. In a presentation to parliament’s finance committee, Reserve Bank deputy governor and registrar of banks Kuben Naidoo said Capitec did not use rescheduled loans to hide nonpayment and to boost new lending, as alleged.
The bank’s provisioning model met legal requirements. Its capital adequacy ratio of 34% was 2.5 times what a normal bank had.
“The bank is very well capitalised relative to other banks,” Naidoo said.
Its liquidity coverage ratio was well over 1 000%, compared with the required 100%. “Capitec is well regulated and has adequate capital and adequate liquidity,” Naidoo said.
The Reserve Bank was continuing to monitor the situation as part of its ongoing supervision.
Capitec has also rejected the Viceroy allegations that it fabricated new loans and collections, approved loans to delinquent customers in order to repay existing loans and overstated its loan book.
The bank has insisted Viceroy’s calculations and assumptions are incorrect, and that the rescheduling of loans and consolidated loans was based on prescribed criteria.
It has strongly denied that it grants consolidated loans for loans in arrears.
Capitec chief executive Gerrie Fourie told the committee a full audit had been conducted related to the allegations and the results would be released with the bank’s annual results on Monday.
“We are quite convinced we have nothing to hide,” he said, but stressed the need to handle the allegations very carefully to maintain the trust of depositors.
Capitec has laid a formal complaint with the Financial Services Board against Viceroy.
Viceroy looks for companies with a very high price to earnings ratio and shorts the company to make profits.
They talked to clients, suppliers, former employees and current employees, who were offered R5 000 an hour for their financial research, which included questions on Capitec.
Fourie briefed the committee on the way the bank functions and its client profile.
He noted that only 20% of loans were consolidated and in each case a full affordability assessment was conducted.
He stressed that the bank adopted very conservative policies and priced for risk.
Fourie said the bank was in a closed period as it would be releasing its results on Monday but reported that it would reach about 10 million clients by mid-April, from 9.2 million at end-August.
The bank had about 25% of the unsecured market, he said. – BusinessLIVE