Shares in Capitec Bank tumbled 20% on Tuesday after research group Viceroy said it had done extensive due diligence. Photo: File

JOHANNESBURG - Viceroy Research has accused Capitec of underhanded business practices and called on Finance Minister Malusi Gigaba and the SA Reserve Bank to immediately place it into curatorship, saying it’s a matter of time before the JSE-listed bank goes bust.

In a report it released on Tuesday titled Capitec: A wolf in sheep’s clothing, the company says based on its research and due diligence, it believes the bank is a loan shark with “massively understated defaults masquerading as a community microfinance provider”. 

Read the latest: Capitec responds to 'loan shark' accusations

While Capitec, with a market capitalisation of just under R110 billion, was a microfinance provider to a majority low income demographic, “yet they out-earn all major commercial banks globally including competing high-risk lenders”.

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It continued: “We don’t buy this story. Viceroy believes this is indicative of predatory finance which we have corroborated with substantial on-the-ground discussions with Capitec ex-employees, former customers, and individuals familiar with the business. 

Viceroy’s extensive due diligence and compiled evidence suggests that indicates Capitec must take significant impairments to its loans which will likely result in a net-liability position. We believe Capitec’s concealed problems largely resemble those seen at African Bank Investments prior to its collapse in 2014.”

It added: “We think that it’s only a matter of time before Capitec’s financials and business unravel, with macro headwinds creating an exponential risk of default and bankruptcy.”

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Viceroy Research rose to prominence after it produced a report detailing how retailer Steinhoff - which later admitted to accounting irregularities - allegedly committed fraud by hiding losses and inflating earnings. 

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- BUSINESS REPORT ONLINE