S African central bank seeks Capitec fee probe

Bloomberg

The South African Reserve Bank has written to the National Credit Regulator requesting a probe into loan- origination fees charged by Capitec Bank Holdings Ltd., according to a person familiar with the matter.
The referral came after the issue was raised in a report by short-seller Viceroy Research in January, said the person, asking not to be identified because the matter is private. The investigation is ongoing, the person said. Capitec Chief Financial Officer Andre du Plessis said he was unaware of the central bank’s referral, or of an investigation by the Johannesburg-based NCR.
Capitec shares dropped as much as 6 percent, the most since Feb. 6, and were trading 4.6 percent down as of 10:47 a.m. in Johannesburg to lead decliners on the six-member FTSE/JSE Africa Banks Index. That extended losses this year 23 percent, making it the worst-performing South African lender.
“We’re in a space now where anything with an uncertainty label on it gets absolutely crushed,” said Ryan Woods, an equities trader at Independent Securities, referring to an emerging-market rout that has seen assets from shares to bonds hammered amid heightened concern over a global trade war.

PRODUCT TERMINATED
In the January report, Viceroy said Capitec boos-ted its income by charging excessive fees on its multi-loan product, which carried a monthly charge for allowing a previously vetted customers to extend their facility by answering some questions.
While Capitec said it terminated the product in 2016, after rules introduced by the NCR meant it was no longer viable, Viceroy said that the lender rebranded it and that Capitec’s methods risk over-indebting consumers.
Capitec denied this, saying Viceroy did not understand the product or how its processes work. The NCR had previously probed the multi-loan facility and was satisfied with the fees and interest charged, Capitec said on February 8.
Both the NCR and Pretoria-based central bank declined to comment.