Capitec Bank now in the spotlight

Viceroy research group, the same guys that blew the whistle on Steinhoff, are now going after Capitec....says they are loan sharks. Wants them placed under curatorship.

Capitec Bank is the latest target of Viceroy Research – the team that produced an explosive report detailing how Steinhoff cooked its books to hide losses and inflate earnings.

In a report released on Tuesday morning, Viceroy describes Capitec as a “loan shark with massively understated defaults masquerading as a community finance provider”.

“We believe that the South African Reserve Bank and minister of finance should immediately place Capitec into curatorship,” it says.

Capitec CEO Gerrie Fourie said: “We have taken note of the Viceroy Report on Capitec Bank. We are currently in the process of investigating the report in detail and will respond appropriately.”

At 10.13am Capitec was off 4.5% to R901, rebounding from an earlier 20% fall.

The Capitec stock has fallen more than 16% in January.

PSG, which holds a sizable stake in Capitec, was off 10.55% at 10.31am.

Momentum Wealth analyst Wayne McCurrie said the report would require careful scrutiny. At this point however, regardless of content, any negative report on a company from Viceroy would have a negative impact on a company’s share price.

Speculation was rife earlier this year, when Viceroy, which spends its time researching companies that it believes have questionable accounting practices, announced on social media that it was looking into another South African company.

Companies such as pharmaceuticals business Aspen and property company Resilient were suspected targets.

On Monday, Capitec closed nearly 8% weaker, suggesting that some in the market suspected the Viceroy report before its Tuesday release.

Capitec “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,” said Viceroy.

“We believe Capitec’s concealed problems largely resemble those seen at African Bank Investments prior to its collapse”

This was indicative of “predatory finance”, a claim it had corroborated with former customers and employees, it said.

“Viceroy’s extensive due diligence and compiled evidence suggests that indicates Capitec must take significant impairments to its loans, which will likely result in a net-liability position. We believe Capitec’s concealed problems largely resemble those seen at African Bank Investments prior to its collapse in 2014.”

Capitec had refinanced delinquent loans, suggesting its loan book was massively overstated. A write-off of R11bn would more accurately represent the delinquencies and risk in Capitec’s portfolio, Viceroy said.

“Reconciliation of loan book values, maturity profiles and cash outflows imply Capitec is either fabricating new loans and collections, or re-financing R2.5bn–R3bn in principal per year by issuing new loans to defaulting clients.”

An upcoming reckless and predatory lending case, which will be heard in March, could lead to a class action, it said.

“We think that it’s only a matter of time before Capitec’s financials and business unravel, with macro headwinds creating an exponential risk of default and bankruptcy.”

This story is unfolding.

Major panic share price bouncing around like a pinball and so far the volume is double that of yesterday and its only 11 am...viceroy went short hows that for printing money like having the sunday newspapers on sat am

I think there's some truth here, I've heard the same accusations before against another big bank in this country. Wouldn't be surprised if the accusations turn out to be true but I don't think they alone but I do think think they the worst. Just my opinion.

The more people drill into this JSE all share the more they gonna find.

Think there is a lot companies padding their books and all the CASA brotherhoods/Cabal are just glossing over the problems.

Last year STEINHOFF and EOH. This year who knows?

Capitec is a surprise. we were all expecting ASPEN to be VICEROY next target.

Markus Jooste is eveywhere........... but where is he?

Sylvester wrote: The more people drill into this JSE all share the more they gonna find.

Think there is a lot companies padding their books and all the CASA brotherhoods/Cabal are just glossing over the problems.

Last year STEINHOFF and EOH. This year who knows?

Capitec is a surprise. we were all expecting ASPEN to be VICEROY next target.

Aspen, Barclays, Discovery, Resilient Property group, EOH take your pick on next target :whistle:

I will go with the first one on your list Sly.. did you check that IEP co?

www.iepgroup.co.za/

See (Our People ) - Jooste resigned Dec 2017

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Where there is smike there is fire - 9 million customers at Capitec - Signed up over a Million in 2017 @ 100 000 new accounts a month . Easy game . Must be doing something right for their customers , like giving out unsecured loans - then when they can not pay back - give them more - charge them admin fees and put the burden on companies to collect garnish order .

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Cant wait for SARS Audit - they are going to eat them alive . Louis G says how does this effect anyone on this site - Well Louis G they are stealing from you and me every day . Profits rise but tax payable stays the same . This is just the begining.

oscar wrote: I will go with the first one on your list Sly.. did you check that IEP co?

.....mostly Investec people....Jo Grove and Chris Van Niekerk also on KAP boards....
but the real give away is that they have the same physical address as Investec.... :oops:

Is it time to convert to cash ....bumpy roads ahead :blink: