The Competition Authority of Kenya (CAK) has delivered a significant shock to the corporate banking sector, ordering Guaranty Trust Bank Kenya Limited (GT Bank) to pay a staggering penalty of KES 33,180,000. The ruling, officially released on 24th February 2026, penalises the bank for engaging in false and misleading representations, alongside unconscionable conduct against one of its long-term corporate clients, ASL Limited.
In addition to the penalty, which represents 2% of the bank’s Gross Annual Turnover for the year 2023, the regulator has mandated GT Bank to refund ASL Limited KES 13,211,285 within 30 days. This refund is the exact summation of fees and charges the CAK determined were improperly levied against the company.
For a commercial banking sector that often relies on the opaque fine print of credit agreements, this ruling draws a hard, unambiguous line: institutional stonewalling and retaliatory exit fees are a direct violation of Kenyan competition law.
The 17-Month Trap
The dispute centres around the management of credit facilities for ASL Limited, a diversified Kenyan company involved in the manufacturing, trading, and industrial sectors. ASL was not a new or high-risk client; the company had maintained a continuous banking relationship with GT Bank since 2001.
In July 2021, ASL secured vital credit facilities, including overdrafts, letters of credit, and asset financing, which were scheduled to expire in May 2022. Operating with standard corporate foresight, ASL submitted a formal request for renewal in January 2022, well within the prescribed period.
What followed was a masterclass in institutional delays. According to the CAK’s findings, despite numerous engagements over several months, GT Bank failed to issue a definitive position on the renewal application.
It wasn’t until June 2023, a full 17 months after the initial request, that GT Bank finally offered a three-month extension. However, this offer came with heavily modified terms: ASL was forced to provide additional security and accept a reduction in one of its trading lines from USD 5.5 million to USD 3.5 million. In July 2023, the bank issued yet another offer letter, reducing the limits by a further USD 3 million.
The Exit Penalty
Realising that the shifting goalposts and shrinking facilities were untenable, ASL notified GT Bank of its intention to transfer its facilities to a competitor, I&M Bank.
The bank’s response was swift and legally perilous. On 31st October 2023, ASL received a formal default notice and was charged KES 13.2 million in default interest. Crucially, this interest was allegedly backdated to August 2023, right when the delayed renewal process was still underway. To avert devastating business disruptions and facilitate the takeover by I&M Bank, ASL was forced to clear massive overdraft amounts, essentially paying a ransom to secure its release.
The Bank’s Defence: “A Candid Error” and “Unjust Enrichment”
When the matter was brought before the CAK on 5th October 2024, GT Bank mounted a vigorous defence, providing a fascinating look into the corporate mindset.
The bank denied all allegations of coercion. It argued that renewing the facilities beyond May 2022 was strictly conditional on ASL providing additional security, and that the continually downgraded offers simply reflected the bank’s “internal assessment of collateral adequacy and risk exposure”. Furthermore, GT Bank insisted that ASL’s failure to execute the final July 2023 offer automatically triggered contractual default provisions, meaning the interest was legally applied, not backdated.
Perhaps most revealing was GT Bank’s stance on a partial refund. Prior to the formal investigation, the bank offered ASL a refund of KES 2.8 million against the disputed KES 13.2 million. Before the regulator, GT Bank characterised this offer not as an admission of liability, but as a “goodwill gesture arising from a candid error”. The bank boldly went further, describing ASL’s demand for full compensation as an “unreasonable attempt at unjust enrichment”.
The Legal Takedown: Sections 55 and 57
The Competition Authority fundamentally disagreed with GT Bank’s interpretation of events, weaponising specific provisions of the Competition Act to dismantle the bank’s defence.
- False and Misleading Representation (Section 55(a)(ii)): The CAK ruled that GT Bank actively misled its client. The Authority found the bank guilty of referring to “materially altered offers as renewals,” thus misrepresenting the continuity and nature of the service. Applying default interest retroactively without prior notice was deemed a misrepresentation of the account status. Furthermore, the CAK noted that making partial refunds without proper transparency confuses the consumer.
- Unconscionable Conduct (Section 57(1)): This is where the regulator addressed the power dynamic. The CAK noted that GT Bank, possessing “significantly higher negotiating power,” took advantage of its position to treat ASL unfairly. The Authority found that the bank imposed unnecessary conditions, unilaterally recalled facilities, and used “unfair tactics and exerted pressure” against ASL to accept unfavourable offers, particularly when the company was trying to migrate to I&M Bank. The continued change of terms impaired ASL’s ability to effectively negotiate.
The Verdict and Market Impact
To deter similar behaviour in the market, the CAK penalisation process applied international best practices, leveraging its power to fine a business up to 10% of its preceding year’s gross annual turnover.
Ultimately, the Authority settled on a 2% levy, resulting in the KES 33,180,000 fine. Beyond the fine and the mandatory 30-day KES 13.2 million refund, GT Bank is required to sensitise its staff specifically on Part VI of the Competition Act and the Competition (General) Rules 2019.
This ruling serves as a vital precedent. It signals to commercial lenders operating in Kenya that leveraging administrative delays to trap corporate clients, or penalising them with obscure contractual clauses when they attempt to switch providers, will be met with severe regulatory and financial consequences.
