Capitec accused of being loan shark

Bank rejects report by US fund manager

Shares in Capitec Holdings dropped as much as 25% after US firm Viceroy Research said the South African lender overstates its financial assets and income, claims which the bank rejected.

Viceroy Research shot to prominence in South Africa last month when it published a report questioning the finances at Steinhoff, owner of more than 40 retail brands around the world.

Steinhoff has admitted “accounting irregularities”, triggering an 85% share slide.

Viceroy Research said in a report: “Based on our research and due diligence, we believe that Capitec [Holdings] is a loan shark with massively understated defaults masquerading as a community microfinance provider.

“We believe that the South African Reserve Bank and minister of finance should immediately place into curatorship.”

Capitec defended its business. “We believe our corporate governance is strong and our communications and disclosures are, and always have been, transparent, clear and to the point,” Capitec said.

“On the face of it, the report is filled with factual errors, material omissions in respect of legal proceedings against Capitec and opinions that are not supported by accurate information.”

Capitec said Viceroy had not discussed any of its claims with the company. In response to the report, the Reserve Bank said Capitec was “solvent, well-capitalised and Capitec

‘‘ The report is filled with factual errors and not supported by accurate info

has adequate liquidity”.

“The South African Reserve Bank notes a report by a USbased fund manager. As part of our mandate, we monitor the safety and soundness of all banks, including Capitec Bank. The bank meets all prudential requirements,” the central bank said.

Viceroy said Capitec overstates its loan book by as much R3-billion a year by issuing new loans to defaulting clients. Capitec would need to write off R11-billion of its loan book to accurately represent the delinquencies and risks in its portfolio, Viceroy added.

“The market fears Viceroy because they came out with interesting information on Steinhoff, they are yet to be proven but certainly it helped push the share price down,” said Cratos Capital equities trader Greg Davies. –

/ SIPHIWE SIBEKO / REUTERS Capitec Bank has defended its business, arguing that the lender’s corporate governance is strong and disclosures have always been transparent.