30/01/2018 13:37 SAST | Updated 30/01/2018 13:37 SAST

SARB Defends Capitec Against Viceroy Allegations

"Capitec is solvent, well capitalised and has adequate liquidity," says the South African Reserve Bank.

Mike Hutchings / Reuters

The South African Reserve Bank (SARB) has defended Capitec Bank amid allegations from Viceroy Research that the financial institution is underhandedly using reckless lending practices.

In a statement on Tuesday, shortly after the 33-page report from Viceroy was released, the SARB said it monitors the safety and soundness of all banks, including Capitec.

"According to all the information available, Capitec is solvent, well capitalised and has adequate liquidity. The bank meets all prudential requirements," SARB said.

Viceroy Research made headlines last year when it uncovered accounting irregularities at global furniture giant Steinhoff. In its latest report, Viceroy called on the SARB and finance minister Malusi Gigaba to immediately place Capitec into curatorship.

Viceroy claimed the reconciliation of loan-book values, maturity profiles and cash outflows imply Capitec is allegedly either fabricating new loans and collections, or refinancing about R2.5-billion in principal per year by issuing new loans to defaulting clients.

Legal documents that Viceroy claim to have allegedly show that Capitec is advising and approving loans to delinquent customers in order to repay existing loans. These documents reportedly show Capitec engaging in reckless lending practices as defined by South Africa's National Credit Act.

In a tweet, Capitec said it had taken note of the allegations, and is currently in the process of investigating the report in detail so that it can respond appropriately.