CAPE TOWN - South African retail bank Capitec has announced that they have settled a legal dispute with Summit Financial Partners, who accused the bank of breaking the country’s credit laws.
In 2016, Summit sued Capitec in early 2016, accusing it of breaking credit laws, and lending recklessly. Capitec has since denied the allegations.
In a statement on Friday (29 June), Capitec said that the case has been withdrawn.
“All Summit assisted and initiated court and NCR cases involving Capitec have been withdrawn. The principle contention in these cases was against the multi loan product which Capitec discontinued in February 2016.
“Both parties have agreed to work together in improving the unsecured lending industry for the benefit of all South Africans. This initiative will include programs to improve consumer financial literacy, providing effective consumer debt relief solutions and building consumer financial capability.
“We believe that this is an important joint step in bringing positive change in the South African credit industry,” the bank said.
Earlier, Viceroy has deemed Capitec "un-investable" and called for it to be placed under curatorship. The bank's CEO Gerrie Fourie hit back at Viceroy by challenging its research practices and accusing it of engaging with the bank through the media, instead of directly.
Capitec Bank chief executive Gerrie Fourie told Parliament members on Tuesday that the structure at Viceroy Research was questionable.
Viceroy Research as an institution is not stable, according to Fourie.
The research company is essentially made up of three people, two Australians, Aidan Law and Gabriel Bernarde, as well as a UK national, Fraser Perring.
What is more troubling is that the research company is linked to at least three hedge funds.
Members of Parliament's standing committee received a briefing from, among others, the South African Reserve Bank's (Sarb's) registrar of banks Kuben Naidoo.
He said allegations of questionable loan practices made against the bank by United States short seller Viceroy, including that it artificially rescheduled loans, had been found not to be correct.
"In our opinion the key allegations are not correct, Capitec is well regulated and they have adequate capital," Naidoo said, noting that the bank had a good cost-to-income ratio of 34%.