Viceroy trying to make money‚ says Wits academic
The shocking report released by Viceroy painting Capitec Bank as a loan shark is a way for Viceroy to make money‚ says Professor Jannie Rossouw of Wits School of Economic and Business Science.
Speaking to eNCA on Tuesday‚ Rossouw said the words “loan shark” used by Viceroy to describe Capitec Bank’s operation were defamatory.
He said the report released by Viceroy had caused some reaction in the country’s financial markets.
“It will be necessary to mention at this point that South African banks are generally well capitalised. South African banks are subject to supervision by the SA Reserve Bank. At this point in time it would be necessary for the Reserve Bank to make some announcement about this - the financial soundness of Capitec Bank - so that we can understand what is going on.
“Viceroy‚ by its own admission has taken a short positioning on Capitec. To explain that‚ they sold the shares before they issued the report‚ expecting that the share price would drop so that they can buy the shares back at a lower price and make a profit of such a position. Viceroy is also trying to make profit from its own report‚” said Rossouw.
Viceroy released its report on Tuesday morning describing Capitec Bank as a loan shark. Researchers further urged the SA Reserve Bank and Finance Minister Malusi Gigaba to place Capitec under curatorship.
In the report‚ Viceroy stated that it had legal documents showing that Capitec advised and approved loans to delinquent customers in order to repay existing loans. These documents also showed Capitec engaging in reckless lending practices as defined by South Africa’s National Credit Act. This corroborated Viceroy’s loan book analysis.
Capitec‚ in a statement released to the markets‚ said it only received the Viceroy report on Tuesday at 10am and said the report “is filled with factual errors‚ material omissions in respect of legal proceedings against Capitec and opinions that are not supported by accurate information”.
Rossouw said anybody can make an assessment on the financial position of a company based on the information they have and the interpretation of the facts in their possession.
“People are at liberty to make pronouncements on companies. It is however slightly different in the case of a bank. Banks are built on confidence. The confidence in a bank is easily shaken‚ hence it is necessary for the SA Reserve Bank as the regulator to step in and make some calm to the market.
“We must also keep in mind that Viceroy did get on to something with Steinhoff but it does not mean that Viceroy is like a saint of financial markets [meaning] whenever Viceroy speaks that is not necessarily the truth.
“We should be careful not to put over-confidence in the pronunciation of Viceroy…
“We have scant information about the people behind Viceroy‚ so we should also understand their motives. In this instance‚ it seems clear that one of the motives of Viceroy is to make money out of the decline in the Capitec share price‚” said Rossouw.