On September 17, 2025, the Extended Chamber of the Supreme Administrative Court of Lithuania (LVAT) partially upheld the appeal of UAB Baltic Financial Company. The court overturned both the 2023 decision of the first-instance court and the resolution of the Board of the Bank of Lithuania, which had denied the company a specialised banking license. Additionally, the part of the case concerning the company’s claim for €1,008,124.21 in damages was referred back to the Regional Administrative Court for further examination.
The Bank of Lithuania refused to issue the specialised bank license, claiming the company’s business plan did not ensure safe and reliable banking operations.
The court acknowledged that while the Bank of Lithuania has broad discretion in evaluating whether a business plan ensures safe and sound banking, the court must still review whether that discretion was exercised lawfully.
Specifically, the court must verify whether:
- the Bank made any clear errors in assessing facts or applying the law;
- it abused its powers;
- it exceeded the boundaries of its discretion;
- it followed procedural rules;
- and whether the decision aligns with the purpose and mission of the institution.
The court found that the bank’s arguments about the business environment, which it used to justify its decision, were not backed by concrete data and were not directly linked to specific aspects of the company’s business plan.
In summary, the conclusion that the business plan did not ensure safe and reliable operations was not supported by clear evidence, and the resolution lacked factual justification and reasoning. Therefore, it did not meet legal standards requiring administrative decisions to be factually and legally substantiated.
It is agreed that the Bank of Lithuania can decide whether a bank’s business plan ensures safe and reliable banking operations when assessing an application for a license. However, this discretion is not unlimited; the assessment must be based on specific data, factual circumstances, and reasons.
It is recommended that financial market participants require the Bank of Lithuania to carry out its assessments, which are based on its discretion, strictly within the limits of its discretion and based on specific data.
This ruling is an essential reminder for financial institutions and fintech companies that while the Bank of Lithuania has discretion in evaluating license applications, such discretion must always be exercised within legal boundaries and supported by concrete evidence. Companies seeking specialised banking licences should ensure their business plans and risk frameworks are robust, well-documented, and aligned with regulatory expectations.
At the same time, the decision may set the course for further legal disputes concerning the limits of supervisory discretion and the protection of financial institutions’ rights. It highlights the growing importance of judicial oversight in ensuring that regulatory authorities act transparently, proportionately, and in line with the principles of good administration.
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