Kenya’s competition watchdog has ordered Guaranty Trust Bank Kenya Ltd, a commercial lender headquartered in Nigeria, to pay a fine of KSh33.18 million after finding the lender engaged in false and misleading representations and unconscionable conduct in its dealings with a long-standing corporate client.
- •The Competition Authority of Kenya (CAK) also ordered the bank to refund KSh13.21 million in fees and charges it determined were improperly levied, concluding that the lender had retroactively applied default interest and mischaracterized materially altered credit terms as renewals.
- •The case stems from a complaint filed in October 2024 by ASL, a manufacturer and distributor serving the construction and industrial sectors.
- •Following an investigation, the CAK found that GT Bank unlawfully charged fees on unapproved facilities, misled the client about the status of its services, backdated default interest without notice, and presented significantly altered loan terms as routine renewals.
ASL had banked with GT Bank since 2001 and in July 2021 secured a suite of credit facilities including overdrafts, letters of credit, guarantees and working-capital lines, backed by company assets and directors’ guarantees.
The facilities were set to expire in May 2022, subject to review and ASL sought renewal in January 2022 within the prescribed period. According to the regulator’s findings, months of engagement failed to yield a definitive position from the bank. In June 2023, GT Bank granted a three-month extension while requiring additional security and revising certain terms, including reducing a trading line from US$5.5 million to US$3.5 million.
A month later, the bank issued a new offer letter further cutting limits by US$3 million. After ASL signaled its intention to transfer its facilities to I&M Bank, it received a formal default notice in October 2023, and was charged KSh13.2 million in default interest, allegedly backdated to August 2023.
To facilitate the takeover and avoid business disruption, ASL cleared overdraft balances of KSh417.8 million and US$197,802. GT Bank subsequently offered to refund KSh2.8 million as a goodwill gesture, which ASL rejected, seeking a full refund.
The regulator further concluded that the bank abused its superior bargaining power through the unilateral recall of facilities, imposition of conditions deemed unnecessary to protect legitimate interests, and backdating of charges that placed the borrower under financial pressure.
In setting the penalty at 2% of the bank’s 2023 gross annual turnover, below the statutory maximum of 10%, the authority said it weighed mitigating and aggravating factors under its administrative remedies guidelines.
GT Bank had argued that the credit facilities were governed by letters of offer issued in 2021 permitting interest-rate variation and default charges. The bank maintained that renewal was conditional on additional security and that the final offer reflected its internal assessment of collateral adequacy and risk exposure. It also denied coercion and said any refund proposal was a goodwill gesture rather than an admission of liability.
