Nigerian lender’s Kenya unit fined KSh33m in regulatory crackdown

Kenya’s competition watchdog has fined Guaranty Trust Bank Kenya Limited, a Nigerian-headquartered commercial lender, KSh33.2 million for false and misleading representations and unconscionable conduct in its dealings with a long-standing corporate client.

In a statement on Tuesday, the Competition Authority of Kenya (CAK) directed the bank to pay the penalty for conduct that contravened the Competition Act. The fine is equivalent to about $260,215 at an exchange rate of 127.5.

“False or misleading representation happens when a business provides false, incomplete, or deceptive information to a customer or creates a false impression about various aspects of a good or service,” the authority said.

The regulator also ordered the lender to refund ASL Limited KSh13.2 million, representing fees it determined were improperly levied.

Unconscionable conduct refers to business practices considered unfair or oppressive, particularly where a firm exploits a customer’s vulnerability, lack of knowledge or unequal bargaining position. Such conduct may include coercion into contracts not fully understood, withholding key information, or using threats or ambiguous wording to influence decisions.

Dispute with long-standing client

The case stems from a complaint filed in October 2024 by ASL Limited, a manufacturer and distributor serving the construction and industrial sectors.

Following its investigation, the CAK found that GTBank Kenya unlawfully charged fees on unapproved facilities, misled the client about the status of its services, backdated default interest without notice and presented significantly altered loan terms as routine renewals.

ASL had banked with GTBank since 2001 and in July 2021 secured multiple credit facilities — including 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, subject to review. ASL sought renewal in January 2022 within the required timeline, but the regulator said months of engagement did not produce a clear position from the bank.

In June 2023, GTBank granted a three-month extension while requesting additional security and revising certain terms, including reducing a trading line from $5.5 million to $3.5 million. A month later, the bank issued a fresh offer letter, further cutting limits by $3 million.

After ASL indicated plans to transfer its facilities to I&M Bank, it received a formal default notice in October 2023 and was charged KSh13.2 million in default interest, allegedly backdated to August 2023.

To facilitate the takeover and avoid business disruption, ASL cleared overdraft balances of KSh417.8 million and $197,802. GTBank later offered to refund KSh2.8 million as a goodwill gesture, which ASL rejected in favour of a full refund.

Regulator cites abuse of bargaining power

The CAK concluded that the bank abused its superior bargaining power through the unilateral recall of facilities, the imposition of conditions deemed unnecessary to protect legitimate interests and the backdating of charges that placed the borrower under financial pressure.

In setting the penalty at two percent of the bank’s 2023 gross annual turnover — below the statutory maximum of 10 percent — the authority said it considered both mitigating and aggravating factors under its administrative remedies guidelines.

GTBank had argued that the credit facilities were governed by letters of offer issued in 2021 that permitted interest-rate variation and default charges. The bank maintained that renewal was conditional on additional security and that the final offer reflected its internal assessment of collateral adequacy and risk exposure.

It also denied coercion, saying the proposed refund was a goodwill gesture rather than an admission of liability.