We have taken note of the Viceroy report on Capitec Bank. We are currently in the process of investigating the report in detail and will respond appropriately.
JOHANNESBURG - Capitec has responded to Viceroy Research, who on Monday accused the bank 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.
The research group said reconciliation of loan book values, maturity profiles and cash outflows implied Capitec was either “fabricating” new loans and collections, or re-financing R2.5 billion - R3bn in principal per year by issuing new loans to defaulting clients.
It said legal documents it had obtained showed Capitec advising and approving loans to “delinquent customers in order to repay existing loans”.
The documents also showed Capitec engaging in “reckless lending practices as defined by South Africa’s National Credit Act”.
“Given what we believe is a massive overstatement of financial assets and income, together with opaque reporting of loan cash flow and reckless lending practices, we believe Capitec is simply un-investable and accordingly have not assigned a target price,” the group said, adding it saw no difference between Capitec and its “ill-fated predecessors” including African Bank.
On social media, Capitec responded to the accusations, tweeting: “We have taken note of the Viceroy report on Capitec Bank. We are currently in the process of investigating the report in detail and will respond appropriately.”
According to Gerrie Fourie CEO, Capitec Bank , "We have been informed of the allegations which Viceroy has made against Capitec Bank. We strongly refute these allegations and are in the process of gathering information to respond to the claims made in the report with facts. We are committed to providing clear and transparent information that will show that these claims are baseless. To this effect, we will have a media briefing this afternoon in Cape Town CBD to respond to all media enquiries."
Earlier, chief financial officer Andre du Plessis told Bloomberg News the allegations were "totally unfounded" “It’s very surprising that someone writes a report who knows nothing about us,” du Plessis was quoted as saying.
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”.
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”.
- BUSINESS REPORT ONLINE