Capitec builds its defence against Viceroy


Capitec builds its defence against Viceroy

Published Date: 2018-02-06 | Source: Stephen Gunnion | Author: Stephen Gunnion | Comments

Capitec builds its defence against Viceroy

The bank says the Viceroy report presents information that is not clearly comparable and fails to present information that is in the public domain

Capitec has again come out swinging against last week's Viceroy report, which labelled the bank a loan shark masquerading as a microfinance provider and called for the authorities to place it under curatorship.

In a statement yesterday, Capitec provided evidence that its loan book reconciles and denied that it had been misrepresented. It also shot down Viceroy's assertion that its loan book had been overstated by R11 billion. And it denied that it rolled existing unpaid loans by issuing new loans and initiation fees charged on rescheduled loans.

"Our loans and advances reconcile and are NOT misrepresented by including rescheduled loans through the issuance of new loans as alleged in the Viceroy report," Capitec said. "We furthermore confirm that we DO NOT advance loans to clients who are in arrears with their Capitec instalments."

Capitec's shares dropped as much as 25% last Tuesday after Viceroy's report, entitled "Capitec: A wolf in sheep's clothing" was released, before retracing most of its losses to closed 3% lower. It dropped again on Wednesday when fund manager Benguela confirmed it had also raised issues around Capitec's loans. The Reserve Bank and National Treasury have both dismissed the Viceroy report, calling it irresponsible due to the impact it could have on the stability of the banking sector. S&P Global Ratings also shrugged off the report by affirming Capitec's credit rating.

Capitec said the report presents information that is not clearly comparable and fails to present information that is in the public domain.

"We believe this intentionally creates the false impression that Capitec's arrears rate is understated compared to two other credit providers mentioned in the report," the bank said."

It said rescheduling of loans was aimed at assisting clients whose circumstances had changed since taking up credit and to manage part of the collection process. It said clients were evaluated on specific rules to see whether they qualified for their loan to be rescheduled. No initiation fees are charged on rescheduled loans as no new credit is advanced, it said.

Meanwhile, Viceroy is sticking to its guns, saying the Reserve Bank is wrong to support Capitec's position. It said the SARB had "staked" its reputation on the accuracy of the company's accounts but it remained firm in its belief that a full regulatory inspection of Capitec would result in it being placed into curatorship.

"The South African Reserve Bank has a responsibility to determine whether the information provided to them - and on which they have their regulatory decisions is accurate," Viceroy said in a statement on its website. "We do not think it is."

In a second statement, Capitec said the campaign against it is likely to continue for the foreseeable future and that shareholders should use caution when reacting to the allegations.

Its shares closed 6.5% lower a R846.66.

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