Capitec Bank of Tuesday “strongly refuted” allegations made by US researcher Viceroy that said it had compiled evidence suggesting the company must take significant impairments to its loans.

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

But Gerrie Fourie, CEO of Capitec Bank, said in a statement: “We have been informed of the allegations which Viceroy has made against Capitec 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 was set to hold a media briefing in Cape Town on Tuesday afternoon to address the issue.

Viceroy said its research showed that Capitec “is a loan shark with massively understated defaults masquerading as a community microfinance provider” and said the South African Reserve Bank and Minister of Finance should immediately place the bank into curatorship.

“As a consequence of re-financing delinquent loans, Viceroy believes Capitec’s loan book is massively overstated,” said Viceroy, which wrote a similarly 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.”

Earlier, Capitec chief financial officer Andre du Plessis told Bloomberg News 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.

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