The Competition Authority of Kenya (CAK) has directed Guaranty Trust Bank Kenya Limited (GT Bank) to pay a penalty of Ksh. 33,180,000 and refund Ksh. 13,211,285 to its customer ASL Limited, following findings of false representation and unconscionable conduct.
Background of the Complaint
The probe began after ASL lodged a complaint on October 5, 2024, citing unfair treatment in the management and renewal of its credit facilities with GT Bank. ASL, which has maintained a banking relationship with GT Bank since 2001, held facilities including overdrafts, letters of credit, guarantees, asset financing, and working capital support.
In 2022, when the facilities were due for renewal, GT Bank declined to provide a definitive reason for rejecting ASL’s application. In June 2023, the bank offered a three-month extension, requiring additional security and revised terms, which ASL accepted.
Disputed Renewal Process
Despite ASL’s compliance, GT Bank later reduced the offer by USD 3 million, prompting ASL to seek alternative arrangements with I&M Bank. GT Bank responded by issuing a formal default notice and charging Ksh. 13.2 million in default interest, allegedly backdated to August 2023.
The bank offered to refund Ksh. 2.8 million, but ASL rejected the partial settlement and demanded a full refund.
CAK Findings
Upon analyzing evidence, CAK determined that GT Bank violated Section 55(a)(ii) of the Competition Act, which prohibits false or misleading representation. The Authority concluded that the bank’s conduct amounted to coercion and unfair treatment of its client.
Conclusion
The ruling underscores CAK’s commitment to protecting businesses from unfair practices in Kenya’s financial sector. GT Bank is now required to pay the penalty and refund ASL, setting a precedent for accountability in the management of credit facilities.
