Viceroy Research has decided to double-down on its damning report issued against Capitec last week, and believes that the South African Reserve Bank is mistaken in showing continued support to the bank.
In a note published on the short-seller’s website on Monday morning, Viceroy said that 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.”
Viceroy Research was thrust into the spotlight late last year after it published a detailed report of the irregularities at Steinhoff – shortly after the company said it would not be able to publish its annual financial results due to irregularities in its accounting.
Viceroy’s latest South African report, titled Capitec: A Wolf in Sheep’s Clothing, made damning claims against the micro-lender, calling the bank a loan shark headed for insolvency.
The research report said that its analysis pointed to predatory lending practices from Capitec, where clients would be pushed to take out new loans to pay off the old ones, while being charged initiation fees and incurring other costs.
Capitec denied the claims calling the report “flawed and inaccurate” and instructed its lawyers to lay a formal complaint with the Financial Services Board.
National Treasury also offered support to Capitec, calling the report “reckless”.
“Viceroy is not regulated in South Africa, and by its own admission, has been trading [short selling] in Capitec shares ahead of the release of its report, and stood to benefit substantially from forcing the Capitec share price to fall by publishing its speculative report about the bank,” Treasury said in a statement on Thursday.
Viceroy said it would be respond to Capitec’s responding statements from last week “shortly”. In a statement issued by Capitec on Monday, the bank warned investors that the Viceroy statement would be coming, and said it would handle any new claims as they are made.