Kenya’s competition regulator has fined Guaranty Trust Bank Kenya Limited 33.18 million shillings (US$255,000) for engaging in misleading and unfair business practices against a corporate customer, ordering the lender to refund additional disputed charges following a lengthy investigation.
The Competition Authority of Kenya (CAK) said the Nigerian-owned bank violated provisions of the country’s Competition Act through false representations and unconscionable conduct in its handling of credit facilities extended to manufacturing and trading firm ASL Limited.
In its ruling, the authority directed the bank to refund 13.21 million shillings in fees and default interest it determined had been improperly levied on the company.
The case stems from a complaint filed by ASL in October 2024 over the management and renewal of loan facilities initially granted in 2021, including overdrafts, guarantees, asset financing and working capital support.
According to the regulator, ASL had maintained a banking relationship with the lender for more than two decades before disputes emerged during negotiations to renew credit facilities due to expire in May 2022.
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CAK found that despite the borrower submitting a renewal request within the agreed timeframe, the bank failed to provide a definitive response for months while continuing to revise lending terms and requirements.
Investigators said the lender later issued altered offer letters presented as renewals, significantly reducing approved credit limits and imposing additional security conditions.
The authority ruled that the bank subsequently issued a default notice and charged over 13 million shillings in default interest, which it retroactively applied without prior notice while renewal discussions were still ongoing.
“This conduct misrepresented the status and availability of banking services and unfairly disadvantaged the customer,” the authority said in its findings.
CAK concluded that the lender breached Section 55 of the Competition Act relating to false or misleading representations, noting that ASL was charged fees linked to facilities that had not been formally approved.
The regulator further determined that the bank’s actions amounted to unconscionable conduct under Section 57 of the law, citing unequal bargaining power between the financial institution and its client.
Authorities said the lender used delays, shifting contractual terms and financial pressure to compel the company to accept unfavourable conditions, particularly after ASL indicated plans to transfer its facilities to another bank.
To avoid operational disruption during the transition, ASL cleared outstanding overdrafts exceeding 417 million shillings alongside a dollar-denominated facility, according to the ruling.
GTBank Kenya has since appealed the decision before the Competition Tribunal, saying the regulator’s conclusions were not supported by available evidence.
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The bank argued that its loan agreements allowed for variation of interest rates and the application of default charges, adding that an earlier offer to refund 2.8 million shillings represented a goodwill gesture rather than an admission of wrongdoing.
Kenya’s competition watchdog said penalties were determined under administrative remedy guidelines allowing fines of up to 10 percent of a company’s annual turnover. The sanction imposed on GTBank represents two percent of its 2023 gross annual turnover.
Beyond financial penalties, the regulator ordered the bank to align its operations fully with competition rules and conduct staff training on consumer protection provisions to prevent future violations.
The ruling underscores increasing regulatory scrutiny of financial institutions in Kenya amid growing complaints over transparency in lending practices and loan restructuring.
In a separate enforcement action, the authority also fined asset financing firm Mogo Auto Limited 10.85 million shillings for misleading customers over loan terms and ordered refunds to affected borrowers.
Regulators said the actions form part of broader efforts to promote fair competition, transparency and consumer protection within Kenya’s rapidly expanding financial services sector.
Analysts say the decision could set an important precedent for corporate banking relationships in East Africa, signaling tougher oversight of lender conduct and reinforcing accountability standards across the region’s banking industry.
