Viceroy takes aim at Capitec

Bank shares fall on report.
Viceroy head, Fraser Perring. Picture: Bloomberg TV

Viceroy Research has taken aim at another South African company: Capitec Bank.

In a report published this morning, the firm alleges that the retail bank is a “wolf in sheep’s clothing”. “We believe that Capitec is a loan shark with massively understated defaults masquerading as a community microfinance provider,” it said, adding that the South African Reserve Bank and Minister of Finance should immediately place Capitec into curatorship. 

Read: Capitec is solvent, says the Reserve Bank

“We strongly refute these allegations and are in the process of gathering information to respond to the claims made in the report with facts. We are committed to providing clear and transparent information that will show that these claims are baseless,” Capitec CEO Gerrie Fourie said in a statement.

According to Bloomberg TV, Capitec CFO Andre du Plessis labelled the report and its allegations as “totally unfounded”. He said it demonstrated a total lack of understanding of the bank’s activities.  

The bank has since issued a Sens statement, in which it confirmed that it received a copy of the report at 10am this morning. It dismissed the report, stating that it had not been approached by Viceroy prior to publication.  “We believe our corporate governance is strong and our communications and disclosures are, and always have been, transparent, clear and to the point. On the face of it, 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”. It also committed to providing a detailed response later today.

Viceroy head Fraser Perring told Moneyweb@Midday’s Warren Thompson that it did not engage with Capitec management as all the information cited is publicly available and based on management’s engagement with investors. Listen to the full interview below:

Shares in Capitec and PSG Group, which holds a 30.7% stake in Capitec per the bank’s latest annual report, have plunged following the release of the report. The Banks Index is also under pressure.

Capitec and PSG Share Graph

In an interview with Bloomberg TV, Perring acknowledged that Viceroy has a short position on the stock. “In essence, we consider Capitec to be uninvestable. We have taken a long-term short position.” He later told Moneyweb@Midday that its short position on the share means that it has a duty to publish “factual and correct” information. 

Viceroy alleges Capitec is fabricating new loans and collections or re-financing R2.5 to R3 billion in principal per year by issuing new loans to defaulting clients. “As a consequence of re-financing delinquent loans, Viceroy believes Capitec’s loan book is massively overstated. Viceroy’s analysis against competitors suggests an impairment/write-off impact of R11 billion will more accurately represent the delinquencies and risk in Capitec’s portfolio.”

Capitec is considered a darling of the domestic banking sector, a result of its earnings growth and rapid growth in market share, with more than 100 000 clients joining the bank each month. Moneyweb previously reported that Capitec outperformed its larger listed rivals during the latest interim period. The bank grew interim headline earnings by 17% to R2.05 billion, compared with Standard Bank‘s 12% increase to R12.11 billion and Barclays Africa’s 7% increase to R7.77 billion. Nedbank’s headline earnings decreased by 2.9% to R5.3 billion owing to losses at its pan-African unit Ecobank Transnational. FirstRand reported a 6% increase in headline earnings to R23.76 billion for its financial year ended June 30 2017.

Viceroy’s three-man team gained prominence after publishing a damning report on Steinhoff, shortly after the retailer announced accounting irregularities, which sent its shares into free fall in December 2017. Perring told Moneyweb@Midday that its investigation into Steinhoff led it to Capitec, due to the interrelated party selling of loans, and the wider unsecured lending market in South Africa. 

Read: Identity of individuals behind Viceroy Research revealed

Prior to the publication of the Capitec report, a tweet by Viceroy stating that it was investigating another South African firm, caused anxiety in the local market. Shares in Aspen and the Resilient stable of companies, rumoured to have been potential targets of the report, were negatively impacted.  



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One thing I don’t want us to lose sight of is the Viceroy, who are hardly impartial given that they are short sellers, only released a Steinhoff report AFTER Markus Jooste resigned. I honestly cannot be convinced that these guys are geniuses finding what everyone else cannot see.

I’m not taking chances. Just sold my CPI shares. I am not willing to lose all my funds in this share. Call me a coward…I don’t care!

Did you even bother to read the report and formulate your own opinion (now or when you originally invested in CPI) or are you just a gambler?

24 times earnings…..Price to book of 6 times! Other banks in SA less than half!
SA growth not great, Regulator sniffing at overcharging and reckless credit, bottom end of the market, saturated growth etc….

I dont think that you are a coward-just a prudent person!!!

Wise. Where there is smoke there is fire. Unsecured loans=danger.

@spatrol. No!
Yesterday they fell 10%. Could not figure out why. Now I know. Viceroy and their buddies probably shorted the share. I lost 20% since yesterday. I sold out today when the price dropped by 10% since 9:00. They are now already down 18%!
If you are willing to lose 85%+ of your investment…good luck to you!

Good Job on getting out. I sold out and slowly buying in as the prices falls in blocks of about 20k. Time will tell…

I short the shares through 100 cfd contracts, i read the report & from what i read these guys done their research, this kind of research you do not find Fund Managers conducting, this is in-depth research. with facts

@DBJcGenerall goodluck…Its going to be a very volatile ride, I was up 7%, sold and now waiting to time my CFD’s

Luckily for you, you are going to live long enough to regret this folly!
What Viceriy shouldn’t be allowed to do, is to take out (a hazard or fire) insurance against their neighbour’s lavish house, then torch it, and claim insurance. If this was the US, the SEC, and possibly FBI and other local and State agencies, and would put the full might of the law on them like a ton of bricks on a mosquito. South African authorities should start without delay proceedings into This company’s double dealing.

they are just unravelling White Monopoly Capital of Stellenbosch…

Whoa the Stellenbosch mafia is under attack once more.

Why pray tell, what exactly is their short position here or any other self-interest they may have here?

I totally agree. Drive the price down, buy the weakened shares then sell once price rises, classic insider trading. However, the MW report on these 3 individuals shows they do not have the ability to put a report like this together and are more than likely fronting for other people or organisations who are making huge amounts of money. Steinhoff was a lucky hit and went further than expected.

That is not how shorting works. Have a read at a frindly site like investopedia for examples of how to use options. It makes the margin on buy low sell high look silly. On the flip side there are shareholders that make a LOT of money out of traders that try and short shares the investors hold.

In a volatile share (tesla is excellent example) a true believer in the bullshit that is Musk can make 4 times the US mortgage rate lending his shares out to shorts while holding all the risks and benefits of owning the share.

Tread carefully – option trading is bloody dangerous and crazy expensive

One only have to look at the size of the loan book and at the exorbitant high interest rate that Capitec charge on small loans to poor and needy clients, to realize their profit model is build on unacceptable and immoral practices, which sooner or later have to implode.


Do you take the same (negative) view about an analyst praising a company in which its firm has a long position as you take on a negative view expressed by an analyst with a short position?

South African investors need to grow up and lose the loyalty thing. Being short a stock is a display of conviction. It is intelligence not treason. Share prices do not only go up.

Next up : Curro

“We have taken note of the Viceroy report on Capitec Bank. We are currently in the process of investigating the report in detail and will respond appropriately,” Capitec CEO Gerrie Fourie


What happened to the line of thinking that one of the Aussie youngsters had potentially acquired information while at Ferrier Hodgson?

Even then, it’s still difficult to think that these 3 Viceroy guys aren’t a front for the real short sellers…



If what you describe is in fact the case then I have to say they really do select their companies for victimisation very well.

They look a bit like market manipulators to me.

Causing havoc and buying at deflated price.

I would love to see their portfolios, most likely stocked up on


and now


That being said, there appear to be some truth to what they are saying. It will be a serious legal challenge if they could not back what they are saying so they must be certain about their information.

If you read the disclaimer in the report , no legal challenge would stand up

they absolve themselves , and state that ven after pub of report they could change and go long

Aspen was pure speculation… they said ‘a South African company’ and people ASSumed it was Aspen.

Now you must see how the so called advisors comes out and say oh they saw this coming like in Steinhoffs case

There is no denying parts of this story : (1) the origins of PSG and Capitec lie in pay day lending that (2) create miserable debt traps for consumers and (3) it was facilitated by contracts and ‘legal’ processes that the highest courts in the land have outlawed. If you deny that, there is no point to a rational debate.

Are they still pay day lenders today? It is hard to say because Capitec does not provide segmental reporting in a manner that their lending revenue and profits can be evaluated discretely from their retail banking operations. What is clear is that they charge 35% interest rates along with a host of fees. What some have queried is that there is no plausible explanation that Capitec can generate profits from their (low) retail banking fees – they would by a miracle have to know tricks that Nedbank, Absa, Standard and FNB are somehow ignorant of. So there is a strong argument that they make a lot of money in payday lending and that this props up the losses in their retail banking.

Are there very large unreported delinquencies? It would have to hidden by outright fraud, (such as the debt losses hidden by Jooste and Wiese). So that is an impossible call to make unless Viceroy knows something not in the public domain.

Capitec can disprove the claims of them being payday lending by proper segmental disclosures. I won’t hold my breath – people don’t talk about their family skeletons.

Next candidate for an investigative review and some tough questions of a similarly incestous board : Curro

Seems like the Skelmbosch boys are quite dodgy!

Was Viceroy lucky when they expose Steinnhoff or are these guys that good?

Yes they did a brilliant job in exposing Steinnhoff and their corruption and SA Corporate Inc. is on their toes now. I honestly think these guys are riding the wave for their first lucky strike with Steinnhoff and boy they’re are using it at their advantage i tell you. And for them targeting SA companies only its suspicious

I honestly cannot be convinced that these guys are geniuses finding what everyone else cannot see. But kudos to them they’re shaking things up and if the corporate is dirty it must be exposed period

Correction on you saying that they only target SA companies, they target different companies also within the USA.

but their major breakthrough was Steinnhoff. Personally I didnt know about these Viceroy guys before Steinnhoff scandal

Pity they only came out after the Steinhoff saga. If they have B%lls why don’t they say outright “We are investigating company XYZ” Me thinks they are making huge profits by short selling and then bring the report out, and they might be buying again at the reduced price…. who knows?

Have you ever tried to get a personal loan from Capitec, I am in a well paying job, have a top rate credit rating and found it so difficult I went got the loan elsewhere. They are not reckless lenders. With all the information being released about the so called 3 researchers and especially their disclaimer, statements like “in our opinion” and the fact they tried to keep their identities secret indicates they are fronting or speculating on the shares and create reports with mainly fictional allegations with some hearsay obtained from disgruntled ex-employees and ex-customers.

None of them actually has the abilities or resources to properly research these reports and compile them. These used to be called hack jobs. I would look at the share selling and buying around each of these companies for the guilty

Speaking truth:

You probably looked elsewhere at 15% interest rates (being sane of mind)

Capitec prefers people that sign up for 35% interest rates, 12% raising fees and god knows what in fees for debt management and death/disability/retrenchment insurance and levies.

Do yourself a favor and read the supporting documents of the Viceroy report. If true it is disgusting.

Qualifier : I do not get how Viceroy gets to the curatorship. If you restated Capitec you may get to R5b or R6b pothole in reported versus actual earnings. So 60% share price haircut, debt downgrade, five new C positions on board. But not Abil

Where is smoke, there’s fire.

Yes, and there could also be arsonists deliberately setting those fires…

Must be nice being in the know and position yourself prior to the release.

Well someone is and making a killing. They just made themselves a potential 20% of R20 billion today

This is catastrophic for the JSE and makes a farce of all financial regulations in South Africa.

What does it say about the state of implementation and execution of regulations locally? What does it say about the competency of regulators? What is the benefit of being the “best regulated exchange in the world for 3 consecutive years” when the opinion of 3 jokers can crash the prices of your biggest and “safest” companies?

Now the very existence of the JSE comes into question. Listing requirements are supposed to protect investors. If listing requirements have no value, the JSE has no value. The average investor will take his money and run. If PSG and Capitec are not safe, what on earth is safe then? Under the mattress is the only safe place then. This is exactly the kind of reasoning that listing requirements are supposed to address.

The whole local financial industry, fund managers and regulators are under attack here. This is war.

Sensei, it sounds like your middle-eastern brethren are trying to manipulate the JSE and key sectors of the economy.

I have to agree with your general point of view. The market fell over their feet in reaction to a report created by a few European guys with ulterior motives . If this report was created by a local BEE company nobody would have taken any notice. This proves that the market is inherently racist. I reject any form of racism as a matter of principle.

Seems Viceroy are either the only ones in the know or trying to short to snap up these shares.

If allegations true, the entire auditing industry in SA is useless and not worth a cent of value.
If false, Viceroy must be charged

It is not as clear cut. Capitec came from nowhere to become the second largest bank in SA based on the number of customers. Apparently the sheep are flocking en masse to Capitec at a rate of in excess of 100000 per month.

Evidently they are doing something right. What is this ? It is giving the other banks with their high charges the middle finger while realising the lion’s share of the money to be made is with interest not ripping the clients off with charges. The model is simple: get a job, bank with us, deposit your salary in your account and we extend credit. Certainly one of the least unloved banks in SA.

Given that the business model is vulnerable to new legislation regarding lending to the indigent PDIs and reserve requirements as well as bad debts due to mass job losses in a recession. Capitec pay similar rates on fixed deposits compared with the other big 4 indicating they are not desperate for capital nor are they seen as more of a risk by the market.

Unless Viceroy are acting on inside information, I don’t see their short paying off in the long term apart from a sharp rand depreciation which is always likely.

I have had a savings accounting with Capitec from the days when I was a student. So (very important) a few months ago I go check out my account only to find that I have other savings accounts as well.

Well fine with that only to realise that other capitec customers also mysteriously have an extra account out of nowhere. Everyone I know had an extra account,savings account at that.

So there you are..that’s where all the new 100 000 customers are coming from.

We can all blame Viceroy for pointing out what the regulators and auditors should have already reported or we can take cognisance of the fact that this country requires some serious overhauls in these areas. They are honest enough to say they are holding a short position. The Stellenbosch boys should all be investigated. Up to now money simply put them out of reach. High time this ended. Look into the history of most of them and you will find previous dodgy dealings. None of this is new just well hidden. They make the Gupta’s look like angels.

If it talks like a Stellenbosch and walks like a Stellenbosch, then short it.

I believe Zero Bank is about to appear out of Stellenbosch! What an unfortunate name!

He he he

@ RogueTrader i totally agree, so lets wait for Naspers report to short the Stellenbosch out of them.

Wow got the love the Stellenbosch (code for Afrikaner) hate out there. If anybody came out and talked about the Jewish Morningside Mafia then everybody would be up in arms about antisemitism racism etc etc. But because it is just the dimwitted Boers that dared to challenge the status quo it is open season…

Of course all white English speaking businesses are squeaky clean….

Yes – I said this long ago – that capitec is a strange phenomenon? It is a “sub prime lender” who shares just keep going up and up even in poor market conditions. That’s the warning sign – its peers, shares prices were falling and capitec was rising that was the anomaly. Its retail bank is just a front. It does not have clients in the upper lsm markets, does not do normal financing activities etc. So what makes it a commercial bank? I think these viceroy guys are onto something.
Further the CEO of capitec should be taking more stringent action to protect investors – its already dropped more than 18 percent in 2 days, saying people don’t understand the bank is a joke to say the least.

Well put. Most of it profits come from unsecured, high-interest loans. You don’t make profits by charging clients 50 bucks a month to have an account. They’ve been trying hard to monetize their client base but it’s hard when the very attraction of their retail banking is the very low cost. Essentially a micro-lender pulling in big bank profits. Amazing how the market has seriously never questioned them before. So goes greed.

Do you invest in Bitcoin? Now that is something that needs to be investigated.

BOOOM the atomic bomb is about to explode, and didn’t CEO Gerrie Fourie sell R13m worth of shares in 2017 as with His predecessor offloaded R49m worth of shares?.

Oh boy here we go again another Stellenbosch mafiozo is about to bite the dust courtesy of the 3 financial musketeers.

Now the Capitec share appreciation over the years compared to other banks its a call for some closer look – lets hope the Viceroy’s guys are just releasing these damning reports to manipulate the market and profit out of it, cause if what they saying is true – SA financial regulation is not as great as we are made to believe

Did you read the background on these 3 muskateers as you call them? None of them has the ability to compile a report like this let alone investigate the information. One used to be a social worker until he was fired for falsifying reports.

Read the report. Some possibly valid points regarding kicking the can down the road with bad debts, but also some terrible research in there. Capitec is not Abil, it has a strong fast growing transnational franchise and it is funded by retail deposits – not loans in EUR like Abil.

Comments around Capitec’s costs being lower than other banks – also not well thought through, Capitec has one integrated IT system – ABSA at one stage had 230. Capitec only has simple banking products, no investment banking or any advisory type products.

This report does not introduce anything new – it is literally a cut and paste job rehashing old media articles and selective quotes from court papers.

We should really start to ask ourselves why these guys are doing this

Because they have a short position like they noted in their press release.

A retail bank that hardly makes any money. The bulk of their profit is EXACTLY like ABIL – high interest, unsecured loans. That can kicking is catching up with them fast.

Have you tried getting a loan from them? It is damn near impossible even with top rated credit rating and well paid job.

Correct. Nothing in the report is new – this was all in the news mid 2016. That being said, I don’t think any “fact” in the report is inaccurate; however, the conclusions based upon these facts are opinion (to which the writers are entitled)

So the issue is not whether the report is newsworthy or not; the issue is why has R4b of Capitec and PSG shares already traded hands based on this report. Why are people such emotional sellers???

My guess is the share will be back where it was by the end of the day and punters won and lost big time

SA not used to aggressive short selling like this. Very good point about leverage – un-geared business would be safe from tactics like this.

These guys do seem to have some inside SA knowledge though would be interesting to see who else shorted CPI before this…

Why did the Capitec founder sell 80% of his shares 18 months ago?

Because he can

Probably he saw the storm coming (Im assuming). Remember Jannie mouton sold his shares before the bomb exploded at Steinnhoff

Every coin has two sides.

As they say where theres smoke theres fire. What Viceroy is reporting on should be investigated by the relevant authorities so that we can get a credible answer.

On the other side of the coin is Viceroy. Short sellers who appeared from nowhere. A former social worker, two 20 somethings from Australia with support from the suddenly resurrected Marc Cohodes (Short seller who went out of business in the Lehman bros collapse ie short seller pot of gold).

These guys are not acting in your interest, or they wouldve worked with and through law enforcement.

Whatever Capitec’s response is to the allegations, Viceroy needs to be investigated themselves. We know from previous articles that these guys are short sellers and they would have likely benefitted from Capitec’s share price fall. Regulators should conduct an investigation into market manipulation – is this not what they are doing? Surely some of the details that they publish that supports their allegations is insider information?

Its all public domain, Of course they have benifited from a short position. Take a company
that is geared , generate a report that highlights some issues , bad news, or vague assumptions based on what they clearly state may not be right. Start a media campaign , allow the panic to set in . Stoke the fire and then reap the rewards…..

Except that by taking that position and issuing a report they fall afoul of market manipulation rules. If what they say is valid then they wouldn’t, but of course you always have to think, “what is this person’s incentive?”

And they think they are protected by their disclaimer and that this is just an opinion so effectively telling us they are talking kak

Its all public domain, Of course they have benifited from a short position. Take a company that is geared for , generate a report that highlights some issues , bad news, or vague assumptions based on what they clearly state are their opinions and may not be right . Start a media campaign , allow the panic to set in . Stoke the fire with media and then reap the rewards…..

The only Viceroy I know is Viceroy Brandy, so all I want to say is “Long live Capitec”.

Their NEXT report must be then for BELL ( he heh heh )


its a fine line , but its not these guys first rodeo .. Read their disclaimer. They are taking a position based on their views, which they clearly state may not be correct. . If the market decides to follow the report that not their problem..

I have read the report – it is clear that Viceroy has “connected the dots” (if that is what some would call cut and paste)which no-one else have done. The report states the following salient FACTS:

1) Capitec is facing a reckless lending suit – that suggests it is not doing proper due diligence on who they lend money to having serious implications on the quality of their loan book
2) Household consumer disposable income and debt levels has been deteriorating over the last few years
3)Its % of loans in arrears are considerably lower than its competition – this is telling due to the fact that the revived African Bank is applying stricter lending criteria. How is it possible that Capitec’s loans in arrears can be so much better than its competitors?

Taking the above facts together (even if you might disagree with some of the other analysis in the report) is telling enough that something does not make sense. It would be interesting to see how management spin this.

It looks like Viceroy has been ‘retained’ by the likes of the Rothschilds and Bear Sterns to assist them ‘buy SA cheaply’.

Smelt a rat some five years ago. Try this – see if you can withdraw more than R3000 in CASH from a Capitec branch. Not possible; I was told to transfer funds to another bank and to withdraw the funds there. Capitec customers are limited to R3000 cash withdrawal per day – WHY???

So the rumours about Viceroy nailing Aspen and Resilient were crap! Methinks the same can be said about the Viceroy Capitec report. We are being played by a triumvirate who are laughing all the way to the bank (and soon to an island in the Bahamas)

I think this ”mom and pop-shop” is in for much more $hit than what they can handle..Also claims that they exposed Steinhoff is rubbish…the German Regulator started questioning them many moons ago!

Yes and we still know very little of the exact nature of the issues at Steinhoff. We have moved into the era where social media becomes judge, jury and executioner…

End of comments.





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