'Don't confuse us with Abil'

Capitec Bank and African Bank are not the same, Capitec's management protested yesterday as the former's share price fell sharply.

When the market opened Capitec shares quickly dipped by 5% to their lowest since April.

Ratings agency Moody's downgraded the bank by two notches last week, citing concerns about its consumer-lending focus and saying that Capitec was less likely than African Bank to receive support from the authorities.

Rival unsecured lender African Bank - after announcing heavy losses - received a "bail-in" of R10-billion, brokered by the Reserve Bank, the Public Investment Corporation and major banks, including Capitec, a week ago.

The Reserve Bank has criticised the Moody's view on Capitec, saying it would step in if there were a risk to the banking system.

Capitec said yesterday that it received a "short telephone review" by Moody's last week.

"Capitec Bank is extremely dissatisfied with the extent of the review and its conclusion," the bank told the JSE News Service yesterday.

Only three months ago Moody's affirmed Capitec's rating.

Despite the bank's assurances last week that it was performing according to plan, Moody's did not listen, Capitec said yesterday.

"Moody's was invited to review additional information, to be provided by Capitec Bank, but unfortunately declined this opportunity," said the bank.

Capitec pointed out that it had a better liquidity-coverage ratio - the short-term measure of liquidity - than required.

Analysts agree that Capitec has been more conservative than African Bank.

"African Bank was its own worst enemy and not a victim of the economy or its model of unsecured lending," said Afrifocus Securities said in a research note yesterday.

"We continue to believe in the superiority of Capitec's business model and structure relative to [African Bank's]," said Afrifocus.

Capitec Bank shares recovered some lost ground in afternoon trading yesterday, finishing the day 2.78% lower at R210.