Viceroy launches renewed attack after bank’s denial

VICEROY Research last night threatened to release more dirt on Capitec in response to the bank’s rebuttal of its report that called for the banks curatorship.

Viceroy said it was preparing a response to Capitec’s statement denying allegations levelled against it.

“A starting point will be how management claim we under-represent repayment in our estimates, yet do not clarify if they have extended new loan to repay old debt,” charged Viceroy.

The firm was responding to a Capitec statement that said its report was filled with factual errors and material omissions in respect of legal proceedings and opinions that are not informed by accurate information.

The “tit-for-tat” between Viceroy and banks ensued as the Viceroy report divided opinion among analysts.

Michael Homem, a hedge fund investment analyst, said he agreed with Viceroy on Capitec’s potential bad debt risk.

“Given the proposed retrenchments in the mining sector reaching more than 32 000 in the next 3 years (assuming miners are Capitec’s clients). It would make the four-month platinum sector strike look small, which hurt African Bank,” Homem said.

African Bank Investments were wiped out in 2012 when strikes in South Africa’s platinum industry prevented its customers from repaying their loans.

It was a roller coaster day for Capitec stock, which opened yesterday at R943, fell to R718 and went on to close at R923.

Viceroy had also taken aim at Jean Pierre Verster, the chairperson of the bank’s audit committee. Verster was appointed to Capitec and Capitec Bank’s boards on March 23, 2015. Viceroy said it believed Verster was indirectly shorting Capitec through Steinhoff.

“We encourage Verster to raise the concerns within this report to company auditors and recognise Capitec’s resemblance to his previous African Bank short.”

However, Verster said allegations against him and Capitec were mischievous.

“The main allegation is that I indirectly shorted Capitec by shorting Steinhoff. Steinhoff’s effective shareholding in Capitec was R7.5 billion, less than 2 percent of their total assets, plus shorting Steinhoff does not cause a shorting of Capitec’s shares, so a bit mischievous,” Verster said.

Verster’s employers, Fairtree Capital, where he serves as equity portfolio manager, also backed their man.

“By virtue of his position as non-executive director of Capitec Bank, Jean Pierre has always been precluded from all investment research, investment decisions and any other related activities in respect of Capitec across Fairtree Capital,” the company said.