Capitec’s request that it be given an opportunity to brief MPs about its business is a canny move by a market-savvy, youngish player in the banking arena.
It’s easy to see why the company has sprung from nowhere to become one of SA’s top five banks, by customer numbers, in just 18 years.
A morning in parliament before the standing committee on finance presents Capitec with an excellent opportunity to show the world what a top-notch, reliable, mainstream bank it is.
And the key regulators invited to attend — the Reserve Bank, the Financial Services Board (FSB) and treasury — will play a useful supporting role in assuring us that everything is hunky-dory. These regulators have made known their irritation at upstart research group Viceroy’s attempts to trash Capitec’s reputation and have already publicly supported the bank.
The FSB has even launched an investigation into Viceroy for potential market abuse and breaches of the Financial Markets Act.
It’s unfortunate that the National Credit Regulator (NCR) hasn’t been invited, or at least doesn’t appear to be attending. The NCR is key to many of the allegations made by Viceroy and is tasked with defending the interests of consumers, as opposed to the interests of the banking system and shareholders, so it would have been useful to have its input. The NCR is best placed to confirm reports that Capitec has upped its game in recent years.
Another party that will be missed is Viceroy. Committee chairman Yunus Carrim says the research firm has been invited, but he’s not holding out much hope that it will attend.
There’s little doubt Viceroy’s work on Capitec was not up to scratch, but it has shaken up the local market and revealed just how tight-knit the investment community is.
The complaint that Viceroy somehow transgressed an industry code by not giving sight of its report to Steinhoff before going public is a grim indictment of the state of the industry. And it is as bizarre as "accusing" the company of only doing it for money.
It’s easy to imagine what Markus Jooste would have made of the report if he’d been given access to it. Indeed, what are the chances of any subject of a critical analyst report not interfering with its publication? If that prospect weren’t chilling enough, there’s also the prospect of analysts being blocked from access to key executives for subsequent reports.
The inevitable result is the production of utterly competent reports that sidestep important but controversial issues. It is the financial market’s equivalent of the Stepford Wives, where everything appears beautiful and pink and hunky-dory. It’s a community in which leaders are sheltered from the sort of critical views that could save them and their stakeholders from destructive hubris.
When Viceroy launched its Steinhoff report it made almost every other Steinhoff report look dim-witted. Next came 36One’s excellent report on Resilient and Investec’s edgy report on Naspers. Perhaps one day a parliamentary committee will investigate why there aren’t more such reports.
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