The Competition Authority of Kenya has fined Guaranty Trust Bank Kenya Limited (GT Bank) Ksh33.18 million after finding that the lender engaged in false and misleading representations and unconscionable conduct against one of its customers, ASL Limited.
In a statement on Tuesday, February 24, the regulator directed the bank to reimburse the affected company for charges deemed to have been improperly imposed.
“The Competition Authority of Kenya has ordered Guaranty Trust Bank Kenya Limited to pay a penalty of Ksh33,180,000 for engaging in false and misleading representations and unconscionable conduct against its customer, ASL Limited, contrary to the Competition Act.
“Additionally, the Authority has ordered GT Bank Kenya Limited (GT Bank) to refund ASL Limited (ASL) KES 13,211,285, being the summation of the fees and charges determined as improperly levied,” the statement read.
According to CAK, the enforcement action followed a formal complaint filed by ASL in October 2024 over the management and renewal of its credit facilities.
“The investigation into GT Bank’s conduct was occasioned by a complaint lodged with the Authority by ASL on 5th October 2024, alleging unfair treatment in the management of and renewal of its credit facilities held with the bank,” the statement added.
CAK outlined the background of the banking relationship, noting that ASL had been a customer of GT Bank for more than two decades.
“ASL 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 secured against the company’s assets and personal guarantees by the directors of ASL,” the statement continued.
According to CAK, the credit facilities were set to expire in May 2022, with renewal subject to review under the existing agreement.
The regulator noted that in June 2023, GT Bank proposed a short-term extension while the renewal process was being finalized.
“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 period prescribed in the agreement.
“In June 2023, GT Bank offered a three-month extension on the facility for the process to be finalized. ASL was required to provide additional security among others demands which it accepted. ASL also accepted other revised requirements including reducing one trading line from USD 5.5 million to USD 3.5 million and retaining a cleared collateral,” the statement further read.
However, the situation escalated when the bank issued a fresh offer letter with further reductions to the facility limits.
“However, a month later, the bank issued a new offer letter, further reducing the limits by USD 3 Million. ASL requested for time to deliberate internally. Upon concluding that the facility amounts and terms on offer were not agreeable, ASL notified GT of intention to transfer its facilities to I&M Bank,” the statement noted.
CAK’s findings indicate that the changes to the loan terms and the manner in which they were handled formed the basis of the determination that GT Bank’s conduct breached provisions of the Competition Act relating to consumer protection.
Following its investigation, the authority imposed both financial penalties and compliance directives on the bank.
“Premised on the above findings, the Authority ordered Guaranty Trust Bank Kenya Limited to pay a pecuniary penalty of KES 33,180,000.00, being 2% of its Gross Annual Turnover for the year 2023; refund ASL Limited KES 13,211,285 within 30 days, the fees and charges that were levied in the account; to comply with the provisions of the Act and the Competition (General) Rules, 2019; and to sensitize its staff on the provisions of the Act, specifically Part VI, and the Competition (General) Rules 2019,” the statement concluded.
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