Even as HFCB Group Plc toasts a rebrand and a Sh1 billion staff share scheme it is calling a reward for talent, a High Court judgment handed down in early July 2026 has stripped away the polish to reveal a lender that spent years quietly rewriting the terms of its mortgage contracts to squeeze more out of borrowers than it was ever entitled to.

The same institution now handing nearly five percent of its equity to insiders through freshly printed shares stands condemned by a judge for hiking interest rates without notice and billing customers for charges that existed nowhere in their loan agreements.

THE JUDGMENT THAT SHOULD HAVE BEEN A RECKONING

The ruling arose from a decades old mortgage dispute involving the estate of the late Benson Njenga Ndindi, who financed a Runda property through the lender in 1991.

The estate told the courts that HFCB had repeatedly pushed the interest rate on the facility from an agreed eighteen percent to as high as twenty six percent, never once issuing the four months written notice its own charge document required.

It further accused the bank of tacking on penalty interest, default charges and other debits that appear in no letter of offer and no signed agreement.

Justice Benard Murunga, hearing the bank’s appeal against a 2024 Milimani magistrate’s judgment, did not let HFCB off the hook. He upheld the finding that the lender had breached the loan agreement by varying rates without the mandatory notice, and upheld the further finding that HFCB had no contractual basis for the penalty interest, arrears interest and default charges it imposed.

The only relief the bank secured was on quantum.

The Sh8.4 million overcharge figure calculated by the Interest Rates Advisory Centre was set aside because the underlying expert report was found to be riddled with gaps, having ignored a 2003 restructuring agreement and relied only on the borrower’s records without ever pulling the bank’s own files.

Rather than close the file, the judge ordered the two sides to jointly appoint an independent accountant within fourteen days to recompute the entire account from scratch, using a fixed eighteen percent rate throughout and stripping out every unauthorised charge.

Strip away the legal language and what remains is a finding that Kenya’s oldest mortgage lender rewrote the rules on a borrower mid contract, for years, and got caught. That the bank avoided a headline damages figure on a technicality of expert evidence does not erase the underlying breach the court affirmed. It only means the bill has yet to be recalculated.

A PATTERN THE COURTS ARE NO LONGER TOLERATING

The timing places HFCB inside a broader shift in how Kenyan courts are treating banks that fail their customers. Days before the Ndindi ruling, the same Justice Murunga upheld a Small Claims Court award against Family Bank, holding that once a customer flags suspected fraud, a bank’s duty to lock down the account is fully triggered regardless of whether the correct PIN was used to move the money.

The court found Family Bank’s own submissions had admitted its practice required an immediate account freeze once a fraud complaint was lodged, and that this had simply not happened.

“A bank is the keeper of the gate through which its customer’s money passes.” — Justice Benard Murunga

HFCB now sits on the wrong side of that same accountability standard, with a court record showing exactly the kind of institutional laxity the judiciary is signalling it will no longer excuse quietly.

THE SHARE SCHEME NOBODY IS INTERROGATING

While that judgment was landing, HFCB was busy executing the very different business of enriching its own ranks. Regulatory filings for May 2026 show the bank’s employees now hold 94.36 million shares, a 4.77 percent stake worth roughly Sh1 billion at the counter’s Sh10.85 close, making staff the fifth largest shareholder bloc in a listed mortgage lender for the first time in its history.

The bulk of that holding, 94.27 million shares, was issued fresh under a new Employee Share Ownership Plan that the Capital Markets Authority cleared for listing on the Nairobi Securities Exchange in December 2025.

It replaced an earlier scheme that was wound up in 2024 after staff bought just 878,593 shares at a discounted price, a scale so modest it barely registered against the new allocation.

Every one of the newly issued shares came from thin air rather than the market.

No investor sold a single share to fund this. The capital table was simply redrawn, and every existing holder now owns a smaller slice of the same pie. Britam Holdings, HFCB’s anchor shareholder, watched its stake slide from 48.18 percent to 45.6 percent.

The family of Kenya Rural Roads Authority chairman Anthony Mwaura saw its combined position cut to roughly 12 percent.

The scheme is capped at five percent of issued capital at any given time and is designed to roll out over five years, allocated according to individual performance ratings that the bank has disclosed nowhere in detail.

That silence is the story mainstream coverage keeps sidestepping.

Nobody outside HFCB’s boardroom knows who sits on the committee that scores those performance ratings, what proportion of the pot is earmarked for the small circle at the top of the organisation chart against branch and back office staff, or whether the metrics used to justify allocations bear any relationship to the mortgage book a court has just found was mismanaged for years.

HFCB’s executive bench, led by Group CEO Robert N. Kibaara alongside Finance Director Sammy Kamanthi, Chief Operating Officer David Igweta, Chief Administrative and HR Officer Catherine Olaka, Director of Sales and Marketing Nkatha Gitonga and Company Secretary Regina Anyika, answers to a board chaired by Prof. Olive M. Mugenda, with veteran non executive Dr. Peter K. Munga among those signing off on the framework.

These are the same people whose interest rate and fee decisions were just found by a court to have breached the bank’s own contracts. They are also the people best positioned to benefit most richly from a scheme whose allocation criteria the public cannot see.

A WIDER KENYAN PATTERN

HFCB is not operating in isolation. Britam itself, sitting atop HFCB’s shareholder register, moved in March 2026 to nearly triple its own ESOP ceiling from two to five percent of issued capital, a decision taken at board level even as the insurer works through a multi year recovery from historic losses.

Two firms bound together by cross ownership are each, within months of one another, expanding the exact mechanism by which insiders convert board discretion into personal equity, with minority shareholders diluted in both cases and neither company publishing a granular breakdown of who actually receives the shares and why.

Whether this reflects a genuine industry wide push toward talent retention or a governance blind spot large enough for the region’s most connected executives to walk through is a question boards, auditors and the Capital Markets Authority owe shareholders an answer to, not a glossy press release.

WHO IS WATCHING THE GATE

None of this means a court has found HFCB’s leadership guilty of fraud. It has not. What the record shows is narrower and, in its own way, more damning: a bank found by a judge to have broken its contracts with ordinary borrowers for years, choosing this precise moment to hand nearly five percent of itself to an inner circle whose selection criteria remain a closely guarded secret.

Employee ownership done properly builds loyalty and spreads value down an organisation. Employee ownership done opaquely, timed to a damaging court judgment and steered by the same executives whose conduct that judgment scrutinised, invites exactly the suspicion now attaching to HFCB.

The mama mboga with savings in an HFCB linked account, the young family servicing a mortgage, the pensioner whose retirement fund holds Britam units that in turn hold HFCB stock, all have a stake in an answer HFCB has not given.

Until the bank publishes a full, independently verified breakdown of who received these shares, on what performance criteria, and why newly printed equity was chosen over any other retention tool, the suspicion will stand that the biggest winners of this billion shilling scheme were never the tellers and loan officers the press releases invoke, but the executives who designed, approved and now administer it.

The court has already shown the gate was left open once.

Whether HFCB closes it, or simply hands the keys to those already inside, is the story shareholders, regulators and customers alike should be demanding answered.