CAK fines GT Bank Ksh.33.18M over false representation

CAK further ordered the bank to refund Ksh.13,211,285 to ASL in fees determined as improperly levied.

In a statement on Tuesday, CAK said that a probe commenced when ASK lodged a complaint against Guaranty Bank on October 5, 2024, citing unfair treatment in the management of and renewal of its credit facilities held with the bank.

ASL had maintained a banking relationship with GT Bank since 2001, with credit facilities including overdrafts, letters of credit, guarantees, asset financing, and working capital support. 

Guaranty Bank is said to have declined to issue a definitive reason on why it could not renew ASL's application in 2022, when the facilities were set to expire.

"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," CAK noted.

"ASL also accepted other revised requirements including reducing one trading line from USD 5.5 million to USD 3.5 million and retaining cleared collateral."

The bank however, a month later, reduced the offer letter by USD 3 million, forcing ASL to want to move to I&M Bank, a move rebutted by Guaranty Bank, slapping them with a formal default notice and charging Ksh.13.2 million in default interest, allegedly backdated to August 2023, when the renewal process had commenced.

The bank is said to have offered to refund Ksh.2.8 million, against the disputed amount of Ksh.13.2 Million. ASL rejected the amount and sought a full refund.

Upon the commencement of the probe, the bank denied allegations of coercion, asserting that ASL’s failure to execute the July 2023 offer triggered contractual default provisions, and that the default interest was not backdated.

"Upon analyzing the evidentiary information, the Authority determined that GT Bank violated Section 55(a)(ii) of the Competition Act on false or misleading representation," CAK added.