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S.Africa's cbank refers Capitec loan products to regulator

(Updates with central bank comment)

JOHANNESBURG, July 3 (Reuters) - South Africa's central bank said on Tuesday it had asked the National Credit Regulator (NCR) to look into whether Capitec continued to use loan products criticised for their fee structure.

Shares in the no-frills bank plunged 5 percent earlier on Tuesday after a Bloomberg report, citing an unnamed source, said the central bank had written a letter to the NCR asking it to open a probe into Capitec's loan-origination charges.

The story was later corrected to remove reference to a letter. Shares in Capitec pared earlier losses to close down 3.94 percent at 853.00 rand.

The South African Reserve Bank (SARB) said, in an emailed response to questions, it had told parliament on May 30 that it met with the NCR and asked it to look into whether Capitec had continued to use criticised "multi-loan products".

The request came after short-seller Viceroy Research said in January that Capitec charged excessive fees on these products, triggering a brief slump in its shares.

Capitec denied wrongdoing and said it had terminated the use of those loan products in 2016 but Viceroy claims they were simply rebranded under another name.

"The continued use of multi-loan products is a market conduct issue and falls within the NCR responsibilities," SARB said. "The SARB met with the NCR and requested that the regulator take the matter forward."

NCR declined to comment on the matter.

Capitec officials could not be reached for comment on the SARB statement but had earlier said media reports regarding the central bank investigation were "misleading". (Reporting by Tiisetso Motsoeneng and Tanisha Heiberg; editing by Emelia Sithole-Matarise)

First Published: 2018-07-03 11:16:52
Updated 2018-07-03 18:26:47

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