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Financial supervision: in its decision refusing to issue a specialised bank licence, the Bank of Lithuania failed to provide adequate justification for its conclusion that the applicant’s business plan did not ensure safe and sound banking operations.

By its ruling of 17 September 2025, an extended panel of judges of the Supreme Administrative Court of Lithuania partially upheld the appeal lodged by the applicant, UAB Baltic Financial Company. The Court annulled the judgment of the court of first instance of 23 June 2023 and the decision of the Board of the Bank of Lithuania, which had refused to issue the applicant a specialised bank licence. The part of the case concerning the applicant’s claim for compensation of EUR 1,008,124.21 in damages was remitted to the Regional Administrative Court for re-examination.

In the contested decision, the Bank of Lithuania refused to issue the applicant a specialised bank licence, concluding that the business plan submitted did not ensure safe and sound banking operations.

The extended panel found that although the Bank of Lithuania enjoyed broad discretion when assessing whether a bank’s business plan ensured safe and reliable banking activities, the court, when exercising judicial review of such a decision, was required to verify whether the Bank had made an obvious error in its assessment of the facts or application of the law, whether it had acted ultra vires or abused its powers, whether it had clearly exceeded the limits of its discretion or complied with procedural rules, whether the factual circumstances relied upon were accurate, and whether the act (or omission) was compatible with the objectives and duties for which the institution had been established and authorised.

The decision’s arguments relating to the business environment were not supported by specific evidence and, moreover, were not linked to particular provisions of the applicant’s business plan. The conclusion that the business plan did not ensure safe and sound banking operations was not substantiated by reference to concrete provisions of the plan or by correlating those provisions with specific data describing the relevant business environment.

The extended panel therefore held that the respondent had failed to substantiate with concrete evidence its conclusion that the applicant’s business plan did not ensure safe and reliable banking operations. The decision did not indicate the factual circumstances or reasoning supporting this conclusion. As a result, the decision did not meet the requirement to set out the factual basis of an administrative act or other relevant circumstances that influenced the decision, nor the requirement to provide adequate reasoning.

Administrative case number eA-111-520/2025