GTBank appeals $257k fine in breach of agreement case in Kenya

GTBank has appealed a decision by Kenyan Authorities asking the lender to pay about $257,000 (Ksh33.18 million) for false and misleading representations and unconscionable conduct against a client, ASL Limited.

GTBank, in an appeal on Tuesday, termed the Competition Authority of Kenya’s (CAK) directive as a misrepresentation of facts. It noted that the CAK findings were not supported by the facts and evidence presented during the investigation.

While providing more explanation, GTBank maintained that its actions during the deal process with ASL align with contractual obligations and adhere to banking regulations. The lender noted that it values its commitment to fair treatment of customers and expects the proceedings to be in full consideration of the matter. 

“The decision to appeal reflects the Bank’s view that the Authority’s findings are not supported by the facts and evidence presented during the investigation,” the lender added. 

However, during its judgment, CAK determined that the timing, communication, and leverage dynamics related to the renewal and default constituted unfair market conduct.

Recall that in addition to the $257,000 (Ksh33.18 million) fine against GTBank, the CAK also directed GTBank Kenya to refund about $102,000 (KSh13.21 million) in fees it determined were improperly levied to ASL Limited. 

In defence, GT Bank noted that its conduct in its banking relationship with ASL Limited was in line with its contractual obligations and in compliance with applicable banking laws and regulations. 

While the matter is now pending before a tribunal, the lender stated that it will not comment further to avoid influencing the outcome or breaching legal protocols.

Also Read: GTBank fined $257k for breach of agreement with client in Kenya

A glimpse into the GTBank case

The case started in October 2024 after ASL filed a complaint over the management and renewal of its credit facilities. 

According to CAK, ASL secured a suite of credit facilities with GTBank, backed by company assets and directors’ guarantees. While the facilities were set to expire in May 2022, the company sought renewal in January 2022 within the prescribed period.

Findings by the regulator revealed that the lender failed to yield to the renewal request after months of engagement. But in June 2023, GTBank granted a three-month extension while requiring additional security and revising certain terms, including reducing the trading line from $5.5 million to $3.5 million and retaining cleared collateral.

The issue then escalated when the bank issued a fresh offer letter with additional reductions to the facility limits.

Following the request, ASL received a formal default notice in October 2023 and was charged KSh13.2 million in default interest, allegedly backdated to August 2023.

In its move to facilitate the takeover and avoid business disruption, ASL cleared overdraft balances of KSh417.8 million and $197,802. GTBank subsequently offered to refund KSh2.8 million as a goodwill gesture, which ASL rejected, seeking a full refund.

Following the 16-month investigation, the regulator found that GTBank unlawfully charged fees on unapproved facilities and misled the ASL about the status of its services. The lender was also accused of backdating default interest without notice and presenting altered loan terms as routine renewals.