By Kimuri Mwangi
The Competition Authority of Kenya has ordered Guaranty Trust Bank Kenya Limited to pay a penalty of KES 33,180,000 for engaging in “false and misleading representations and unconscionable conduct” against its customer, ASL Limited, contrary to the Competition Act.
In addition to the fine, the Authority directed the bank to refund ASL KES 13,211,285, being the sum of the fees and charges determined to have been improperly levied, within 30 days.
The investigation arose from a complaint lodged by ASL on 5th October 2024, alleging unfair treatment in the management and renewal of its credit facilities. ASL, a diversified Kenyan company involved in manufacturing, distribution and trading in industrial products primarily serving the construction, electrical, industrial, and manufacturing sectors, had maintained a banking relationship with GT Bank since 2001.
In July 2021, ASL secured credit facilities including overdrafts, letters of credit, guarantees, asset financing and working capital support. The facilities were scheduled to expire in May 2022, subject to review and renewal. In January 2022, ASL submitted a formal request for renewal within the prescribed period.
According to the complaint, despite numerous engagements over several months, the bank did not issue a definitive position on the renewal application. In June 2023, GT Bank offered a three-month extension and required additional security, which ASL accepted alongside revised requirements, including reducing one trading line from USD 5.5 million to USD 3.5 million and retaining cleared collateral.
However, a month later, the bank issued a new offer letter further reducing the limits by USD 3 million. After determining that the facility amounts and terms were not agreeable, ASL notified the bank of its intention to transfer its facilities to I&M Bank.
On 31 October 2023, ASL received a formal default notice and was charged KES 13.2 million in default interest, allegedly backdated to August 2023. To facilitate the takeover by I&M Bank and avert business disruptions, ASL cleared overdraft amounts of KES 417,848,415 and USD 197,802.
Before the start of investigations, GT Bank offered to refund KES 2.8 million against the disputed KES 13.2 million. ASL rejected the offer and sought a full refund, arguing that the default interest was unfairly and improperly applied.
The Authority’s investigation was premised on possible violations of Section 55 of the Competition Act on false or misleading representations, and Section 57(1) concerning unconscionable conduct in business transactions. Oral and written submissions from both parties were recorded in line with the Fair Administrative Actions Act of 2015.
GT Bank maintained that the credit facilities were governed by Letters of Offer issued in July and October 2021, which permitted variation of interest rates and charging of default interest. It argued that renewal beyond May 2022 was conditional on ASL providing additional security and that the extension was meant to facilitate compliance. The bank denied allegations of coercion and said the default interest was applied according to contractual terms, not backdated. It described its proposal to refund part of the interest as a “goodwill gesture arising from a candid error, rather than an admission of liability,” and termed ASL’s demand for full compensation “an unreasonable attempt at unjust enrichment.”
Upon analysing the evidence, the Authority determined that GT Bank violated Section 55(a)(ii) of the Act by, among other actions, “continuing to charge fees for unapproved facilities, misleading ASL about the availability and approval status of the services, and applying default interest retroactively without prior notice.”
The Authority also found that referring to materially altered offers as renewals misrepresented the continuity and nature of the service, and that making partial refunds without proper admission or transparency could mislead the consumer.
On unconscionable conduct under Section 57(1), the Authority found that the bank “possessed significantly higher negotiating power relative to ASL” and took advantage of its position by unilaterally recalling facilities and backdating charges. It further concluded that GT Bank imposed conditions “not reasonably necessary for the protection of its legitimate interest, used unfair tactics and exerted pressure, and that continued changes of terms and conditional offers impaired ASL’s ability to negotiate effectively.”
Premised on these findings, the Authority ordered GT Bank to pay a pecuniary penalty of KES 33,180,000, being 2% of its Gross Annual Turnover for the year 2023, refund ASL KES 13,211,285 within 30 days, comply with the Act and the Competition (General) Rules, 2019, and sensitize its staff on the relevant legal provisions.
The Authority noted that the Competition Act allows for a penalty of up to 10% of a business’s preceding year’s gross annual turnover, and that the determination of penalties considers mitigating and aggravating factors to ensure fairness and proportionality.
In response, Guaranty Trust Bank (Kenya) Limited confirmed receipt of the decision issued on 29th January 2026 and announced that it has appealed to the Competition Tribunal.
The bank said its conduct “was, at all times, consistent with its contractual obligations” and in compliance with applicable banking laws and regulations. It added that the decision to appeal reflects its view that the Authority’s findings “are not supported by the facts and evidence presented during the investigation.”
