The South African National Civic Organisation (Sanco) on Tuesday said United State-based research group Viceroy’s report into Capitec Bank was an attempt to downgrade SA’s financial and banking sector and to undermine an economy that is on the rebound post the African National Congress (ANC) conference which elected Cyril Ramaphosa as party president.

In a report released on Tuesday, Viceroy Research accused Capitec of reckless lending practices and called on the South African Reserve Bank (Sarb) and Finance Minister Malusi Gigaba to immediately place it under curatorship, saying it had compiled evidence suggesting the company must take significant impairments to its loans.

Shares in Capitec Bank tumbled as much as 20 percent after the announcement by Viceroy which said it had done extensive due diligence on Capitec and that the company would likely find itself in a net-liability position.

The Viceroy report, titled “A wolf in sheep’s clothing, stated that it believes the bank is a loan shark with “massively understated defaults masquerading as a community microfinance provider”.

Capitec Bank, in a statement, said it “strongly refutes” the allegations.

And Sanco national spokesperson Jabu Mahlangu said: “There is no doubt that our banking sector is among the best in the world with proper and adequate oversight systems and that Capitec has entrenched itself as a leading bank that is catering for the lower end of the market. We have confidence in its performance and monitoring of the sector by the South African Reserve Bank.”

Mahlangu slammed what he said is an attempt to distort markets, as well as trade investments, in order to destabilise Capitec.

He also welcomed Sarb’s assurance that according to all the information at its disposal, Capitec is solvent, well capitalised, has adequate liquidity and meets all prudential requirements.

– African News Agency(ANA), Editing by Lindiz van Zilla