Gerrie Fourie, Capitec's CEO.

CAPE TOWN - Capitec Bank on Tuesday questioned a report by US researcher Viceroy for releasing a report with allegations that it had compiled evidence suggesting the South African bank must take significant impairments to its loans.

CEO Gerrie Fourie said that Viceroy had not been in contact with the bank ahead of releasing the report.

"They brought out a one-sided report which we believe a lot of things are factually, completely incorrect... We also got a problem with the fact that they short their stock then bring out the statement," he said. 

"So they have got a profit motive behind it. I think that they can do much more to get the facts from both sides."

He said that Capitec bank gave instructions to their attorneys to take it up with the Financial Services Board (FSB).

"We not happy with the way they actually go about it."

Shares in Capitec Bank tumbled as much as 20 percent on Tuesday after the announcement by Viceroy which said it had done extensive due diligence and that the company would likely find itself in a net-liability position.

Viceroy said its research showed that Capitec "is a loan shark with massively understated defaults masquerading as a community microfinance provider" and said the South African Reserve Bank and Minister of Finance should immediately place the bank into curatorship.

"As a consequence of re-financing delinquent loans, Viceroy believes Capitec’s loan book is massively overstated," said Viceroy, which wrote a similarly damning report about Steinhoff before accounting irregularities were revealed at the retail company last December.

"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."

 

Read Also: #Viceroy report into #Capitec an attempt to downgrade banking sector - Sanco

The South African National Civic Organisation (Sanco) on Tuesday said Viceroy's report into Capitec Bank was an attempt to downgrade SA’s financial and banking sector and to undermine an economy that is on the rebound post the African National Congress conference which elected Cyril Ramaphosa as party president.

In a report released on Tuesday, Viceroy Research accused Capitec of reckless lending practices and called on the South African Reserve Bank (Sarb) and Finance Minister Malusi Gigaba to immediately place it under curatorship, saying it had compiled evidence suggesting the company must take significant impairments to its loans.

Shares in Capitec Bank tumbled as much as 20 percent after the announcement by Viceroy which said it had done extensive due diligence on Capitec and that the company would likely find itself in a net-liability position.

-BUSINESS REPORT ONLINE