Johannesburg - Capitec [JSE:CPI] has thrown its doors open, inviting US-based short seller Viceroy to inspect the bank's business operations after its latest allegations.
According to the bank, Viceroy’s new report - released on Wednesday - is again filled with factual inaccuracies, misleading half-truths and sensationalist statements. The report, A rolling loan gathers no loss, again accuses Capitec of overstating its loan book and having inadequate provisions for bad debt.
The latest report follows the shortseller’s controversial report in late January, which labelled Capitec a “loan shark” with bad debt and said it should be placed under the curatorship of the South African Reserve Bank (SARB). Capitec has strongly denied the allegations.
The report initially caused Capitec's share price to drop, but it has strengthened since then. The SARB came out to bat for Capitec in late January, stating that the bank had met all prudential requirements.
In early February, Viceroy again published a five-page statement on its website, taking aim at the SARB for vouching for Capitec's financial robustness. It said the Reserve Bank’s figures as provided by Capitec were not reliable.
On Wednesday, in the third salvo Viceroy has fired at the bank, it again requested that Capitec be placed under curatorship, standing by the allegations it made in January. Viceroy also accused Capitec of abusing South Africa’s debit order system.
“Capitec’s behavior has led to material overstatement of the quality of the book and substantial under-provisioning,” it said.
Capitec said Viceroy again made assumptions without speaking to it, stating that its open invitation for Viceroy to contact it still stands. It highlighted the strict legal framework banks operate under in South Africa. “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,” the bank said. “Various regulators and government institutions have confirmed their support of Capitec since the release of the Viceroy Report.”
The bank also cited international independent rating agency Standard and Poor’s, which said the report had no bearing on its rating of the bank.
Capitec said that it, like all financial institutions, is continually assessed within the framework of the country’s robust regulatory environment and holds regular meetings with the relevant regulators.
“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,” the bank said.
Capitec said it would not engage in mudslinging, and it remains committed to full disclosure and transparency – values it was founded on 17 years ago. “Our doors will remain open to answer questions from media, clients and investors – as well as Viceroy.”* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER