The War Between Viceroy Research & Capitec Intensified This Morning With Viceroy’s Open Letter With A List Of Questions It Wants Answered…
BE careful what you wish for, the saying goes. In the ensuing war between Viceroy Research and Capitec, the latter had spoken about it’s willingness to be transparent.
The research company has intensified it’s battle in an open letter to Capitec with specific questions the bank must answer. It’s the kind of stuff that calls for popcorn, as we wait and watch what the next move will be.
“20 February 2018
The Board of Directors
PO Box 12451 Die Boord
Stellenbosch 7613 South Africa
Dear Board of Directors Viceroy open letter to Capitec Thank you for your open invitation to address our questions. We believe our reports have clearly conveyed our concerns with Capitec, but have happily condensed our research into questions if that is your preference. 1. In the 12 months to August 2017, what was the actual value of loans that were cured out of arrears? Capitec provides an estimate of cured arrears for the year ending August 2017 in its response to concerns raised by Benguela Global Fund Managers dated 1 February 2018.
Read the full letter here letter-to-capitec-20-02-18
It all started with the research company accusing the bank of being a loan shark that had overstated its financial assets and income. With every fall of the bank’s shares, ordinary citizens wondered why their uncle’s favourite brandy had made news.
Not another Steinhoff!
Based on our research and due diligence, we believe that Capitec is a loan shark with massively understated defaults masquerading as a community microfinance provider. We believe that the South African Reserve Bank & Minister of Finance should immediately place Capitec into curatorship.
Capitec Bank Holdings Limited (JSE: CPI) is a South Africa-focused microfinance provider to a majority low-income demographic, yet they out-earn all major commercial banks globally including competing high-risk lenders. We don’t buy this story. Viceroy believes this is indicative of predatory finance which we have corroborated with substantial on-the-ground discussions with Capitec ex employees, former customers, and individuals familiar with the business.
Viceroy’s extensive due diligence and compiled evidence suggests that indicates Capitec must take significant impairments to its loanswhich will likely result in a net-liability position. We believe Capitec’s concealed problems largely resemble those seen at African Bank Investments (JSE: AXL) prior to its collapse in 2014….”
The link above has the full article.
But the South African Reserve Bank (SARB) jumped in quickly, defending Capitec Holdings, which it said was “solvent, well capitalised and has adequate liquidity”.
That didnt stop the research company from hitting back. It said the Reserve Bank had mistakenly decided to stake its reputation on the accuracy of Capitec’s accounts.
“The South African Reserve Bank has a responsibility to determine whether the information provided to them – and on which they base their regulatory decisions is accurate. We do not think it is,” it said.
“The SARB has, at this point, a responsibility to perform a full regulatory inspection of Capitec. Viceroy remains firm in its belief that this will result in SARB placing Capitec into curatorship.” https://viceroyresearch.org/2018/02/05/viceroy-comments-on-sarb-statement/
Capitec CEO Gerrie Fourie strongly defended the bank: “Our banking regulators have a solid track record – in fact, our banking industry is seen as one of the best in the world – Capitec therefore operates in a very stable environment with a track record of 17 years of transparency.”