Guaranty Trust Bank Kenya Limited (GT Bank Kenya) will pay a penalty of Ksh.33,180,000 for engaging in false and misleading representations against its long-standing client.
The penalty stems from a directive this week in which the Competition Authority of Kenya (CAK) ordered the lender to pay ASL Limited, citing a breach of the Competition Act.
CAK has also been directed to refund the client Ksh.13,211,285, representing fees deemed improperly levied on the company’s accounts.
The dispute arose from a complaint filed by ASL on October 5, 2024, regarding the handling and renewal of its credit facilities.
ASL, a diversified Kenyan company operating across manufacturing, distribution, trading, and industrial products, has been a GT Bank client since 2001.
ASL alleged that, despite submitting a formal request for renewal of its credit facilities in January 2022, GT Bank delayed a definitive response for several months. The bank initially offered a three-month extension in June 2023, with revised conditions, including additional security and reduced trading limits.
However, a subsequent offer further reduced the facility limits by $3 million, prompting ASL to consider transferring its accounts to I&M Bank.
In October 2023, ASL received a default notice and was charged Ksh.13.2 million in default interest, allegedly backdated to August 2023.
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The company cleared outstanding overdrafts totaling Ksh.417.8 million and $197,802 to facilitate the transition and avoid business disruptions.
GT Bank Kenya has formally appealed the CAK decision to the Competition Tribunal, stating that it believes the Authority’s findings are not supported by the evidence, basing its actions on contractual obligations and applicable banking laws.
“The Bank values its long-standing commitment to fair treatment of all customers and believes the appellate process will provide an opportunity for a fuller consideration of the matter. Pending the outcome, we will refrain from further comment out of respect for the judicial process.”
But according CAK, GT Bank’s conduct impaired ASL’s ability to negotiate effectively and make informed business decisions, constituting a breach of Sections 55 and 57 of the Competition Act.
The Authority applied the Consolidated Administrative Remedies and Settlement Guidelines, imposing a fine equivalent to 2% of GT Bank’s 2023 gross annual turnover.
