Kenya’s Competition Authority of Kenya (CAK) has fined Guaranty Trust Bank Kenya Ltd $257,209 (KSh 33.18 million), equivalent to 2% of the lender’s 2023 gross annual turnover for false and misleading representations and unconscionable conduct in its management of corporate credit facilities.
The penalty, issued under Sections 55 and 57 of the Competition Act, also requires the Nigerian-owned bank to refund its long-standing client ASL Limited $102,413 (KSh 13.21 million) within 30 days. The sum covers improperly charged fees, including retroactive default interest applied without notice.
ASL Limited, a manufacturer and distributor serving Kenya’s construction and industrial sectors, has banked with GT Bank (a subsidiary of Nigeria’s GTCO Plc) since 2001. In July 2021, the company secured a suite of credit facilities, overdrafts, letters of credit, guarantees and working-capital lines backed by company assets and directors’ guarantees.
The facilities were due to expire in May 2022.ASL applied for renewal in January 2022, well within the required timeframe. After months of inconclusive negotiations, GT Bank in June 2023 granted only a three-month extension while demanding additional security and slashing a key trading line from $5.5 million to $3.5 million.
A subsequent offer letter cut limits further by $3 million. When ASL signalled its intention to transfer the facilities to I&M Bank in October 2023, GT Bank issued a formal default notice and applied $102,413 (KSh 13.21 million) in default interest backdated to August without prior notification. To complete the transfer and avoid operational disruption, ASL cleared outstanding overdraft balances of $3.24 million (KSh 417.8 million) and $197,802.
The CAK’s investigation, triggered by ASL’s October 2024 complaint, concluded that GT Bank had, Mischaracterised materially altered credit terms as routine “renewals”, Charged fees on facilities that had never been approved, Abused its superior bargaining power through unilateral changes, unnecessary new conditions and backdated charges that placed the borrower under severe financial pressure, Offered only a partial $21,705 (KSh 2.8 million) “goodwill” refund, which ASL rejected.
GT Bank had argued that its 2021 offer letters permitted interest-rate variations and conditional renewals and that no coercion occurred.
In addition to the financial sanctions, the CAK has ordered the bank to train staff on competition-law compliance and to ensure all future dealings adhere strictly to the Act. The ruling is being watched closely by Kenya’s banking industry.
While the fine is well below the statutory maximum of 10% of turnover, analysts say it sends a clear signal that regulators are prepared to intervene in what have traditionally been viewed as private commercial negotiations, particularly where mid-sized corporate borrowers face significant power imbalances.
“Credit-renewal processes are under increasing scrutiny,” noted one Nairobi-based banking analyst who declined to be named. “International and regional lenders operating in Kenya will need to ensure greater transparency and documentation if they wish to avoid similar regulatory intervention.”
GT Bank Kenya had not issued a public comment on the determination at the time of publication. The case underscores the CAK’s expanding role in policing conduct across Kenya’s financial services sector at a time when authorities are also pushing banks to improve lending practices for SMEs and corporates amid a challenging economic environment.
For international investors and creditors, the decision highlights both the opportunities and the compliance risks of Kenya’s growing but closely supervised banking market
