Capitec left fuming after news report hammers its shares

Shares in Capitec fell more than 5% on Tuesday morning, following the publication of a Bloomberg news report alleging that the South African Reserve Bank (Sarb) had requested an investigation into fees charged by the bank.

The news report published early Tuesday claims the Sarb has written to the National Credit Regulator (NCR) to request a probe into the origination fees charged by Capitec on its multi-loan product, following the publication of controversial reports by short-seller Viceroy Research.

The multi-loan product was the subject of a legal dispute between Capitec and consumer advocacy group Summit Financial Partners, which alleged that the product was in contravention of the country’s credit laws. The parties reached recently reached an out of court settlement while a previous NCR investigation cleared the product.

According to Viceroy Research, the legal dispute could have been used to trigger a multi-party litigation refund for which it believed the bank would be required to refund related origination fees to the tune of at least R12.7 billion. The bank has, on several occasions, denied Viceroy’s claims and even published its own analyses of the reports, pointing out flaws in the short-seller’s logic and methodology.

Capitec has strongly repudiated the Bloomberg report. “Capitec Bank has taken note of the blatant, misleading and untruthful media commentary by Bloomberg News service … We have no knowledge of the investigation Bloomberg refers to and are in close and regular contact with Sarb and the NCR.”

The Sarb and NCR are yet to respond to the allegations.

Shares in the bank remain on the back foot with a ratings upgrade from S&P failing provide a lift. S&P Global raised the bank’s long-term credit rating to ‘zaAA’ from ‘zaAA-’ following a “revision of its criteria on national scale ratings and subsequent recalibration of the mapping table for South Africa”.

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