Capitec says Old Mutual’s Canter misquoted by Bloomberg, is not withdrawing funding

There is nothing so powerful as a man without an agenda. I was reminded of it this afternoon by an  entrepreneur whose business is now run by private equity investors. It’s tough for him to get some of these corporate animals to understand his suggestions don’t carry ulterior motives. They’ve been in the zoo so long they seem to believe every decision is driven by self-interest and corporate politics. I was accused of the same on Twitter today in the wake of Charlie Graham’s blog on reports that Old Mutual is to stop putting money into Capitec bonds.  Capitec’s head of communications, Charl Nel, tweeted: “Old Mutual went public 2 state Bloomberg’s got it wrong, again. U still proceeded. Is there perhaps an agenda here?” No agenda Charl. Trying to get to the truth. In the interests of objectivity, here’s a statement on the matter from Charl’s colleague at Capitec,  Carl Fischer. 

By Carl Fischer* 

Our understanding is that Andrew Canter of Old Mutual was misquoted.

In a letter to us he confirmed that the issue was about their categorisation of funding to the unsecured market. In the future they will not define funding to the unsecured credit market as developmental funding. They do criticise the nature of this market segment which we do not necessarily agree with. We do not believe the issue is between us and Andrew or Old Mutual, but between Bloomberg and Andrew and therefore do not see a need to participate in this debate.

Furthermore, Andrew Canter has confirmed that their wider suite of funding, for example bond and money market funding, will still include Capitec Bank’s issues.

We respect the views of Andrew Canter, however believe the following facts could shed a better light on market conditions.

• The levels of indebtedness are a concern to all the formal credit providers. The NCR and the industry players are trying to find practical solutions in this regard.
• NCR stats show there are 20 million active credit clients in South Africa
• NCR stats also confirm that the mortgage bond market has been static for the past 7 years to 2013 at 1,8 million accounts
• Illana Melzer from Eighty/20 has indicated that growth in formal dwellings based on the latest Census has been from 7,2 million households to 10,7 million households in 2011. Most of which have electricity for the first time.
• The question is how are 18,2 million credit active South Africans funding their life improvement needs and housing needs.
• The NCR stats show that the number of impaired records of all credit consumers has increased from 46,5% in 2010 to 48% in 2013.
• The NCR stats on the unsecured credit market indicate that the percentage of records (by rand value) that are current has declined from 74,8% in 2010 to 73,1% in 2013. The unsecured market has declined by 14,5% year on year for the second quarter to June 2013.

We trust this gives some food for thought as to credit consumption in South Africa.

* Carl Fischer is Capitec’s Group Executive: Marketing and Corporate Affairs. Carl joined Capitec Bank in 2000. He was the chief executive of marketing and support services of Boland PKS from 1999 to 2000.