'Capitec is a loan shark'
Research group Viceroy has accused Capitec of engaging in reckless lending practices and massively overstating their financial assets and income.
In a new report Viceroy labels the unsecured lender as a wolf in sheep's clothing.
#Capitec Treasury says it's aware of a report by #Viceroy that the bank is on the verge of bankruptcy
— Jacaranda News (@JacaNews) January 30, 2018
Viceroy first came to South African prominence when it exposed irregularities at international retailer Steinhoff.
Viceroy believes the bank is guilty of approving loans to delinquent customers to allow them to repay existing loans.
It alleges that the bank is borrowing money to customers who have been found guilty of not paying off their debt, but then refinancing their debt with another loan.
In a 33-page document the group writes that Capitec has massively overstated its loan book, and might have to write off loans of around R11 billion.
"We see no operational difference between Capitec and its ill-fated predecessors, including African Bank," the report states.
Economist Azaar Jammine says should there be substance to the allegations it will have a devastating effect on South African consumers.
"There is a lot of people, especially in the lower income groups in society, the bona fide of Viceroy in this supply of information need to be investigated as a matter of urgency because the fall of Capitec will have serious ramifications for consumer spending and the wellbeing of many South Africa's low income groups."
Capitec has rejected the report, stating "on the face of it, the report is filled with factual errors, material omissions".
