Kenya’s competition regulator has fined Guaranty Trust Bank Kenya Ltd (GT Bank) KSh33.18 million after ruling that the lender engaged in misleading representations and unfair conduct in its handling of a corporate client’s credit facilities.
The Competition Authority of Kenya directed the bank to reimburse KSh13.21 million in charges it found had been improperly imposed. According to the authority, the lender retroactively applied default interest and portrayed substantially revised loan terms as routine renewals.
The dispute arose from a complaint lodged in October 2024 by ASL, a manufacturer supplying the construction and industrial sectors. Following its inquiry, the regulator concluded that the bank levied fees on facilities that had not been approved, misrepresented the status of services, backdated default interest without adequate notice, and issued materially altered credit terms under the guise of standard renewals.
ASL had maintained a banking relationship with GT Bank since 2001. In July 2021, it secured multiple credit lines including overdrafts, letters of credit, guarantees and working capital facilities, backed by company assets and directors’ guarantees. These were due to lapse in May 2022, subject to review. ASL applied for renewal in January 2022 within the stipulated window, yet months of discussions reportedly failed to produce a clear outcome.
In June 2023, the bank granted a three-month extension, demanding additional security and revising terms, among them a reduction of a trading line from US$5.5 million to US$3.5 million. A month later, a fresh offer letter further slashed limits by US$3 million. After ASL indicated plans to move its facilities to I&M Bank, it received a formal default notice in October 2023 and was billed KSh13.2 million in default interest, said to have been backdated to August.
To smooth the transfer and avoid operational disruption, ASL settled overdraft balances amounting to KSh417.8 million and US$197,802. The bank later proposed a KSh2.8 million refund as a goodwill measure, which the company declined, insisting on full reimbursement.
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The authority determined that the lender had exploited its superior bargaining position by recalling facilities unilaterally, imposing conditions it deemed unnecessary to safeguard legitimate interests, and retroactively applying charges that placed the borrower under financial strain.
In imposing a penalty equivalent to 2 percent of the bank’s 2023 gross annual turnover, below the statutory ceiling of 10 percent, the regulator said it considered both mitigating and aggravating factors under its administrative sanctions framework.
GT Bank maintained that the facilities were governed by 2021 offer letters permitting interest rate adjustments and default charges. It argued that renewal was contingent upon additional security and that revised terms reflected internal risk assessments. The bank denied any coercion and said the proposed partial refund was a gesture of goodwill rather than an acknowledgment of wrongdoing.
