SA Reserve Bank deputy governor and registrar of banks Kuben Naidoo on Wednesday said that he was not aware of any new probes into Capitec Bank.
This after Bloomberg on Tuesday reported that the SA Reserve Bank had written to the NCR to request a probe into loan-origination fees charged by the bank, citing a person familiar with the matter. Fin24 could not independently confirm the investigation.
The news caused Capitec's share price to decrease by as much as 5% o Tuesday. Capitec [JSE:CPI], in a strongly worded response on Tuesday called the report “blatant, misleading and untruthful”.
The bank on Wednesday morning reiterated that it had not been contacted by the NCR. “Capitec is unaware of any investigations currently underway against it instructed by SARB,” said Charl Nel, head of communications at Capitec Bank. It asked that further queries be directly to the SARB and the NCR.
Speaking to Fin24 on Wednesday morning, Naidoo said there were "no new developments" in the Capitec matter as far as he knew.
“I don’t know why what was reported was reported [on Tuesday]. We have a good relationship with the NCR and discuss issues of a mutual interest. Some of the issues in the Viceroy report are indeed of mutual interest,” he said.
The Viceroy connection
The NCR, which falls under the Department of Trade and Industry, promotes a fair and transparent credit market place. Part of its job is to prohibit unfair credit and credit-marketing practices.
In a short response to a request for clarity by Fin24, a NCR spokesperson wrote: "We decline to comment on the matter."
The SARB and the NCR initially focused on Capitec after US-based short seller Viceroy published a research report into Capitec in late January, claiming that the bank’s “meteoric growth” had been built on a shaky foundation that included “advising and approving loans to delinquent customers” in order to repay existing loans.
Capitec at the time strongly disputed the claims, saying that Viceroy’s report had been filled with “factual errors, material omissions in respect of legal proceedings against Capitec and opinions that are not supported by accurate information".
But given that Viceroy had authored a similar report before the collapse of the share price of Steinhoff - and questions about what effect the short seller was having on SA shares - Parliament’s oversight committee on finance and invited the SARB, Capitec and the NCR to appear before it for a briefing on May 30.
At the time National Credit Regulator CEO Nomsa Motshegare said that in reviews of Capitec’s loans, no recklessness was picked up.
The NCR however flagged that many loans were issued in a short space of time which is not sustainable. Motshegare said that Capitec would continue to be monitored closely.
Naidoo on Wednesday said the bank had nothing to add to what he had said previously.
“We were asked what our response to the Viceroy report was. One accusation was around the provision of loans, the existence of a multi-loan facility. The first two are within the ambit of the prudential authority and the third falls into the ambit of the NCR to look into."
“We met with the NCR to discuss the issues in the report. We separated the areas amongst ourselves and agreed to look at them. We have done the work and these are ongoing matters which we don’t generally report on.
“Our ongoing supervisory and investigations among other ongoing supervisory work has found the findings of the Viceroy report are not correct. The substance of the findings contained in the Viceroy report are not accurate.
“We have repeatedly said that the two main allegations, mainly the allegations of re-scheduling loans to inflate the loan book and provisioning model of the bank, as far as those two issues go we are comfortable with the status of the bank.
"Parliament has called us twice on this and we have nothing to say other than what was already said."
Late last month consumer watchdog Summit said it had withdrawn all assisted and initiated court and National Credit Regulator cases it brought against Capitec.
As Fin24 reported, the principle contention in these cases was against Capitec's multi-loan product, which the bank discontinued in February 2016.
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