Shares in Capitec Holdings dropped as much as 20 percent after U.S. firm Viceroy Research said the South African lender overstates its financial assets and income, claims which the bank rejected.

Capitec H1 HEPS up 20 per cent

Viceroy Research shot to the spotlight in South Africa when it published a report questioning the finances at Steinhoff International, owner of more than 40 retail brands globally. Steinhoff has since admitted “accounting irregularities”, triggering an 85 percent share slide.

By 0908 GMT, Capitec stock had dropped 12.6 percent to 826.81 rand, paring some losses after slumping to a low of 755.00 and lagging far behind a 1.9 percent drop in the Johannesburg blue-chip Top-40 index.

“Based on our research and due diligence, we believe that Capitec is a loan shark with massively understated defaults masquerading as a community microfinance provider,” Viceroy Research said in a report.

“We believe that the South African Reserve Bank & Minister of Finance should immediately place Capitec into curatorship.”

Capitec said on its Twitter feed that it had taken note of Viceroy’s report and that it would “respond appropriately”.

Capitec’s Chief Financial Officer Andre du Plessis told Bloomberg TV the allegations were “totally unfounded.”

“It’s very surprising that someone writes a report who knows nothing about us. There’s a total lack of understanding of what we do,” du Plessis said.

Reporting by Tiisetso Motsoeneng, Tanisha Heiberg and Nqobile Dludla; Editing by James Macharia