Capitec Bank has responded to the latest allegations by American short-seller, Viceroy Research Group, saying its new report is again filled with factual inaccuracies, misleading half-truths and sensationalist statements.
Viceroy on Wednesday published a follow-up report on Capitec, where it again alleged that the bank was trying to hide dubious lending practices, and made further allegations that Capitec was abusing South Africa’s debit order systems.
Viceroy – which makes money by shorting a company’s stock and then releasing damning reports on those groups – said that Capitec was ‘cleaning’ its loan customers by immediately granting loans to clients who had taken out other loans to repay their previous Capitec loans, without a ‘cool down’ period.
This, the research group said, made Capitec’s loan books look healthier than they are in reality, while effectively ‘hiding’ the risks of default from its client base.
“Viceroy continues to believe that Capitec is fundamentally uninvestable and reiterate our recommendation that an investigation by an independent body is launched in the face of the evidence presented in our research,” it said.
The researcher said it had evidence of its claims against Capitec, sourced from former employees and customers, which it would present to the South African Reserve Bank and the National Credit Regulator.
Responding to the latest report, Capitec again extended an open invitation to Viceroy to contact it, saying “we will be happy to clarify any questions about the industry and Capitec Bank.”
“Capitec operates in one of the best-regulated financial industries in the world. Various regulators and government institutions have confirmed their support of Capitec since the release of the Viceroy Report. In addition, international independent rating agency, Standard and Poor’s, said that the report had no bearing on its rating of the bank.”
Capitec Bank, as with all financial institutions, are continually assessed within the framework of the country’s robust regulatory environment and regular meetings with the relevant regulators are held.
“We encourage anyone with allegations of wrongdoing to share the information and documentation with the National Credit Regulator or other relevant regulators, so that the normal regulatory processes can be followed. This applies to Viceroy as well.”
Capitec said it will not engage in mudslinging and it remains committed to full disclosure and transparency – values that Capitec were founded on 17 years ago.
“Our doors will remain open to answer questions from media, clients and investors – as well as Viceroy.”
Capitec previously notified investors to be cautious while trading in its shares as it expected an extended attack with various “false allegations” being made by groups like Viceroy and others.