Viceroy vs Capitec -The Report and Fall out

Viceroy Concerns About Capitec

Early on Tuesday morning research group, Viceroy issued an alarming 33-page report called: Capitec: A wolf in sheep’s clothing.

In the report, they made serious allegations that the bank was inflating some financial figures and concealing problems from investors. They even compared Capitec Bank to African Bank prior to its collapse.

Serious allegations of reckless lending were made. Reckless lending is when consumers are given credit without understanding the quotation or contract, where consumers can’t afford to repay the debt or where the creditor failed to properly check that the consumer could repay the debt (and some other situations as well). Because reckless credit can result in big fines and debts being written off or payments delayed this is a serious matter.

Viceroy then called on the SA Reserve Bank and Finance Minister to immediately place Capitec into curatorship.

‘With Steinhoff still fresh on everyone’s mind, the public and press went mad’

Everyone Lost Their Minds

With Steinhoff still fresh on everyone’s mind, the public and press went mad. There were serious concerns about a run on the bank (where everyone tries to withdraw their money on the same day).

The phone lines at the NCR went down (maybe because too many people were calling and the system and their 2 receptionists could not handle the calls – over Capitec or over the draft Debt Intervention legislation being discussed at parliament?).

Capitec immediately went public with strong denials and said: ‘The Viceroy report …was filled with baseless and factually incorrect claims. The information in it was not accurate, reliable or up-to-date’.

They then held an interview with Bloomberg the same day and tried to answer all the allegations made. They rushed to try to reassure clients, investors and shareholders as the market reacted to the accusations.

Capitec Shares Take Serious Knock

After the announcement, Capitec’s share value dropped seriously, at one point, by around a massive 25%. Capitec went on to say that they want to assure their clients that they are: ‘open for business and …welcome the statement from the Reserve Bank that we are solvent with adequate liquidity’.

The Reserve Bank did in fact, issue a statement saying that people should not panic and that the Bank did have sufficient liquidity and this seemed to calm everyone down.




Viceroy Short Capitec Stock

It soon became public knowledge that Viceroy themselves were shorting Capitec stock (so when the value dropped they actually made lots of money) and this called their motives into question. Some said they were acting in self-interest and the allegations were recklessly made and had caused undue panic.

Various parties have called for a detailed investigation into the claims in the report including several political parties. Already there are several pending legal matters and other concerned parties who over the last few years have expressed concerns over how the bank loans consumers money and whether all the required legal steps are being followed. One of these court matters will be heard in March this year.

It seems that Viceroy itself might come under investigation due to the matter, which is probably far from over. Over the last few days since the report was published Capitec stock has stabilised.

Capitec has over 9.2 Million clients and has won many international awards identifying it as one of, if not, the world’s best banks.


Leave a Reply

Your email address will not be published. Required fields are marked *