Bank clients back in water after ‘loan shark’ slur
● The initial panic that flared this week when Viceroy Research released its Capitec report has subsided, with Capitec clients remaining loyal to the micro lender.
While some depositors withdrew their money on Tuesday, the impact was described as mild. Withdrawals abated after a Reserve Bank statement defending the bank’s capitalisation and liquidity, Capitec CEO Gerrie Fourie said this week.
“When the Reserve Bank came out with its statement there was a lot of assurance in the market,” he said. “When our reports and our media interactions came out we saw a lot of stability. It’s quite interesting that on Tuesday, when the report came out, we had put up 8 000 new accounts.”
The market reacted significantly to Viceroy’s report, with Capitec’s share price falling more than 25% before recovering later in the week.
‘Three people upset the market’
“We are starting to see normality,” Fourie said. “What you are seeing now is a lot of support coming from clients, asset managers and the media.
“Everyone is asking the question, ‘Who is Viceroy and why can three people upset the market?’ ”
Viceroy shot to prominence late last year when it released a report on the irregularities at multinational retailer Steinhoff, the day after Markus Jooste resigned as CEO, saying Steinhoff operated as a “Ponzi scheme”.
On Tuesday, Viceroy’s John Fraser Perring appeared on Bloomberg TV, shortly after the Capitec report was released, and conceded that he had profited from the fall in the bank’s share price.
Viceroy, which has legal proceedings pending against it in the US for its research on fraud allegedly perpetrated by MiMedx, operated under anonymity until recently.
The three-person team was revealed last month to comprise Perring, a 44-year-old British citizen and former social worker working from New York, and Australians Gabriel Bernade and Aidan Lau, both 23, working from Melbourne.
When Viceroy took aim at Capitec’s “loan shark” practices this week, it asked the Reserve Bank to put Capitec under curatorship immediately, saying that Capitec was no different to the infamous African Bank, which collapsed under its reckless lending practices.
‘Stood to benefit substantially’
Viceroy, which compiled its report on publicly available information, including interviews with former Capitec employees, did not offer Capitec the right of reply.
The National Treasury said on Thursday that Viceroy had acted recklessly in the manner in which it released its Capitec report and that it was “not acting in the public interest nor in the interest of financial stability in South Africa.”.
“Viceroy is not regulated in South Africa, and, by its own admission, has been trading [short selling] in Capitec shares ahead of the release of its report, and stood to benefit substantially from forcing the Capitec share price to fall by publishing its speculative report about the bank,” the Treasury said.
The Financial Services Board confirmed that it is probing Viceroy for possible market abuse and breaches of the Financial Management Act, after being approached by Capitec and the Treasury.
In response to the Treasury’s statement, Viceroy tweeted that it welcomed any lawful investigations into any impropriety.