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capitec is open for business and committed to transparency01/02/2018
Capitec Bank thanked its more than 9.5 million clients for their support after many jumped in to support the bank when it came under attack by Viceroy. Capitec Bank clients took to Twitter and Facebook, rallying behind the bank and its values of simplicity and transparency.
Viceroy, a New York-based research house consisting of 3 unknown traders, released a report with allegations about the bank’s finances and operations without contacting Capitec Bank for input. Viceroy has since publically admitted that it benefits from a drop in Capitec Bank’s share price.
Capitec Bank's Chief Executive Officer Gerrie Fourie came out strongly in defense of Capitec, while the SA Reserve Bank – responsible for ensuring that banks operate within a regulatory framework and have enough money to service its clients – also came out in support of the bank, saying “Capitec is solvent, well-capitalised and has adequate liquidity”.
In a statement, Fourie said, “Our banking regulators have a solid track record – in fact, our banking industry is seen as one of the best in the world – Capitec therefore operates in a very stable environment with a track record of 17 years of transparency.”
He said that he is touched by the support from Capitec Bank’s client base as displayed on social media and in personal messages.
Fourie added that in the interest of transparency and full disclosure, the bank decided to respond to the key allegations and the inaccurate statements.
Allegation 1: Capitec Bank is a reckless lender
This is not true. Capitec Bank is very conservative in its client assessments to make sure that clients can afford to repay their loans. Capitec Bank values a long-term relationship and always aims to do what is in the best interest of its clients. Various factors are considered before granting a loan, including past credit behaviour from the credit bureaus, stable income validated by a payslip, monthly expenses and the ability to pay back loans as assessed using the client’s bank statements.
Allegation 2: Capitec Bank reschedules clients’ loans to make extra money
This is incorrect. Capitec Bank only reschedules loans to assist its clients who cannot afford their repayments due to unforeseen circumstances, by re-negotiating the terms of the loans. A full credit and affordability assessment is done again, and rescheduling is only granted to clients after a strict review. No additional fees are earned by Capitec Bank when the loans are rescheduled.
Allegation 3: Capitec Bank is selling a product – multi-loans – which is not permitted by the National Credit Regulator
This is incorrect. Capitec Bank discontinued its multi-loan product when the NCR regulations changed in 2015. The credit facility operates similarly to a credit card, except that clients repay the full outstanding amount every month and have to re-apply every 9 months. It is completely different to the past product.
Allegation 4: Capitec Bank is the same as the failed African Bank and is a risk to investors and clients
Once again, this is devoid of truth. Capitec Bank is a fully-fledged retail bank and has different sources of income. The bank doesn't only grant loans, it also has transactional clients who deposit and save their money with Capitec Bank. This means there are various sources of income.
Fourie concluded by saying, “Your money is safe with us – nothing has changed in our business. We will continue to be transparent and we remain committed to full disclosure. These accusations do not only hurt Capitec Bank, it also damages our economy.”