Shares in Capitec Bank tumbled 20% on Tuesday after research group Viceroy said it had done extensive due diligence and compiled evidence suggesting the company must take significant impairments to its loans which would likely result in a net-liability position.
“As a consequence of re-financing delinquent loans, Viceroy believes Capitec’s loan book is massively overstated,” said Viceroy, which wrote a damning report about Steinhoff before accounting irregularities were revealed at the retail company last December.
“We think that it’s only a matter of time before Capitec’s financials and business unravel, with macro headwinds creating an exponential risk of default and bankruptcy.”
Capitec officials were not immediately reachable for comment on Tuesday, but Chief Financial Officer Andre du Plessis told Bloomberg the allegations were “totally unfounded”.
“It’s very surprising that someone writes a report who knows nothing about us,” du Plessis was quoted as saying.
Capitec shares recovered some of their losses by 1030 am, to trade 10% lower on the day on the Johannesburg Stock Exchange.