Shares in Capitec Bank tumbled as much as 20 percent on Tuesday after US researcher Viceroy said it had done extensive due diligence and compiled evidence suggesting the company must take significant impairments to its loans which would likely result in a net-liability position.

The lender said it was studying the report and would respond.

Viceroy said its research showed that Capitec "is a loan shark with massively understated defaults masquerading as a community microfinance provider" and said the South African Reserve Bank & Minister of Finance should immediately place the bank into curatorship.

"As a consequence of re-financing delinquent loans, Viceroy believes Capitec’s loan book is massively overstated," said Viceroy, which wrote a similarly damning report about Steinhoff before accounting irregularities were revealed at the retail company last December.

"We think that it’s only a matter of time before Capitec’s financials and business unravel, with macro headwinds creating an exponential risk of default and bankruptcy."

Capitec officials were not immediately reachable for comment on Tuesday, but the lender said via its Twitter account it had taken note of the Viceroy report.

"We are currently in the process of investigating the report in detail and will respond appropriately," it said.

Earlier, chief financial officer Andre du Plessis told Bloomberg News the allegations were "totally unfounded"

“It’s very surprising that someone writes a report who knows nothing about us,” du Plessis was quoted as saying.

Capitec shares were trading 15 percent weaker on the day by 1110 am on the Johannesburg Stock Exchange.

Read the report here.