“We went to bed heroes on the 29th of January and shortly after we woke up on the 30th ,we were zeroes. That is the thin line between roaring success and turbulence. It is a lesson in remaining humble at all times.”
On that fateful morning, Capitec management woke up to the news that Viceroy Research had published a document accusing the bank of massive overstatement of financial assets and reckless lending practices. They claimed that the bank was ‘simply uninvestable’.
“To be accused of dishonesty was extremely upsetting. We had to accept that success breeds scrutiny. You cannot control what others say about you, how you react to it is what matters. We were very swift with our reaction, issuing two Stock Exchange News Service (SENS) announcements that same day and convening a Bloomberg News Conference shortly thereafter. We had over 700 lines open where investors could dial in for us to address any concerns.”
André believes that the entire “exposé” was fabricated by the Delaware based research company to short sell Capitec stock. The Viceroy Research website disclaimer does indeed state that readers “should assume that the authors have a direct or indirect position in all stocks and stand to realize monetary gains in the event that the price declines”.
“What I learnt from the Viceroy experience was how to deal with a crisis. If you told me in December 2019 that due to the COVID-19 crisis we would have to send over 3,000 call centre agents home to work from there, I might have said we would not survive. But we have learnt that you have two choices when the unexpected happens, you can choose to be a victim, or you can choose to take it on the chin and make a plan. It is for that reason that the bank has performed well, despite the pandemic.”
People do not phone André with good news.
“If people call you when things are not going well, it shows that you are dependable. You should be concerned if you are not called upon in moments of crisis. A banker never sleeps well because we are dealing with issues of money, technology, credit risk…. Managing an operation that processes 6,000 transactions per second means if something goes wrong, it can be catastrophic. This calls for a mindset of thinking straight and acting straight. My approach is to consult colleagues, have robust stakeholder discussions, engage in fervent prayer and to gather critical information to make the best decision.”
