The report triggered a sharp fall in Capitec’s shares and an angry response by the bank, accusing Viceroy of a smear campaign.
The FSCA said immediate damage had been done to Capitec’s share price, which fell close to 25%, and that Viceroy had benefited financially from the share decline.Predatory practices”, accusing Capitec of predatory finance practices by targeting low-income, high-risk borrowers and charging them way above the maximum interest rate allowed by law. When clients defaulted, Capitec would rollover the unpaid loans and issue new loans to the same customer.
Viceroy concluded that Capitec was on its way to African Bank-style collapse, and issued subsequent reports sticking to its guns and building on its thesis. Gabriel Bernarde, a partner at Viceroy, countered that, saying the FSCA did not take their inputs into consideration. Viceroy followed that up with a report on Steinhoff, detailing the dodgy transactions that finally led to the retailer’s stunning collapse in late 2017.