Stanbic Bank has suffered a major blow after the Supreme Court dismissed its final attempt to stop a Sh32 billion breach-of-contract claim filed by Nairobi-based Santowels Limited.
The ruling brings to a close a legal battle that has stretched for over two decades, with Santowels accusing Stanbic of unlawfully charging interest on a loan facility without proper ministerial approval.
In the decision delivered by a five-judge bench led by Deputy Chief Justice Philomena Mwilu, the Supreme Court rejected Stanbic’s application to review an earlier verdict made on June 28, 2024, which had affirmed that interest rate hikes must be approved by the Cabinet Secretary in line with Section 44 of the Banking Act.
The court said the bank had failed to present any compelling grounds to justify reopening the matter, stating that the application did not meet the legal threshold for review.
“This was an attempt to reopen a matter that had already been conclusively determined,” the bench ruled. “There was no clerical error, fraud, or new evidence to warrant a second look.”
Santowels Limited, led by its managing director Rajiv Raja, first filed the case in 2004, alleging that Stanbic (then operating as Grindlays Bank) had increased loan interest rates illegally.
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The company claimed it had been overcharged to the tune of millions of shillings and sought compensation for both direct losses and breach of contract, which now amount to more than Sh32 billion, inclusive of penalties and compounded interest.
“The justice system has finally worked. We have waited more than 20 years for this day,” said Rajiv Raja in a statement after the ruling.
Stanbic had argued that it acted within the law and claimed the interest rates were part of a valid contract, further stating that approval by the Central Bank of Kenya Governor had sufficed.
However, the court held that delegation of authority to the CBK Governor through Legal Notice 35 of 2006 did not override the legal requirement for express Cabinet Secretary approval under the Banking Act.
The Court of Appeal had earlier dismissed the bank’s objections in April 2022 and upheld an earlier High Court decision that awarded Santowels Sh10.4 million as compensation for excess interest. The Supreme Court’s refusal to review that verdict effectively locks the matter.
With the review bid now dismissed, the bank has no further legal room to contest the case and will be required to comply with the compensation order, subject to enforcement procedures.
The ruling also sets a significant precedent, warning lenders against bypassing regulatory requirements when adjusting loan terms.
