However, Sir John concluded it was “difficult to express a general view with any confidence as to whether the overall level of losses, while considerable, is higher than might have been expected from an institution in its start-up phase”. He added: “I heard views from external investment professionals that it was not.”
Sir John was appointed in November to carry out the first statutory review of the SNIB, as required under the Scottish National Investment Bank Act 2020. It followed an eventful first five years for the bank since it opened in November 2020 with a £2 billion war chest to invest in Scottish firms that aligned with three founding missions over 10 years: supporting the transition to net zero, harnessing innovation, and tackling place-based inequality.
Since then the bank has come under fire for the level of churn it has seen at leadership level and the heavy losses it has faced on key investments.
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The first chief executive of SNIB, Eilidh Mactaggart, left her role abruptly in February 2022, prompting intense questioning of the bank’s leadership after it initially failed to explain the reasons for her departure. It was eventually disclosed that Ms Mactaggart had departed for personal reasons.
The bank is now on to its third permanent chief executive in five years, with David Ritchie taking over the reins from investment veteran Al Denholm – who was appointed permanent successor to Ms Mactaggart in May 2023 – in January of this year.
It has also come in for stinging criticism for the losses it has made on certain investments.
The bank became embroiled in the political fall-out that stemmed from the collapse of the company set up to run Scotland’s failed deposit return scheme in 2023. It caused the bank to write off its £8m investment in Circularity Scotland, which contributed to the SNIB making a loss of nearly £15m in the year ended March 31, 2024.
More recently, the collapse of Glasgow-based M Squared Lasers in August last year is expected to result in the bank losing £34m of investment in the photonics company.
The bank is expected to make a loss on the £28m it committed to Trojan Energy, the Aberdeen-based kerbside charging solutions business for electric vehicles, which was sold in a pre-pack deal in February. It is also facing a loss on its £29m investment in Orbex, the Scottish rocket manufacturer and launch services provider, which fell into administration the same month.
Chairman Willie Watt has previously addressed the losses made by the bank on some of its investments. Writing in SNIB’s report for 2024/ 2025 in August last year, which revealed a “paper loss” of £77m on the revaluation of its investments, Mr Watt noted that “we will experience individual cases of loss, as not all of our investments will succeed”.
“We take any individual losses seriously but recognise that an appropriately high level of investment risk is essential to our role in Scotland’s investment landscape,” he added.
Sir John said in his report: “It is in the nature of things that not all investments will succeed – particularly since the bank is seeking to invest in propositions that might not otherwise take flight. And it is a fact that failed investments generally materialise more quickly than major successes, especially when the bank is investing for the longer term. It is also worth noting that there have been serious economic headwinds since the bank was established.
“Up to the end of 2025-26, losses of £73m had been crystallised across four investees. Further losses of up to £37m are expected to arise from two investees who have entered administration or liquidation; and since the last year-end accounts, there is an additional sum of as yet unrealised losses, although these have yet to crystallise.
“Each investment failed for a particular combination of specific reasons. And it is difficult to express a general view with any confidence as to whether the overall level of losses, while considerable, is higher than might have been expected from an institution in its start-up phase. I heard views from external investment professionals that it was not.
“Given that [bank’s] investments are funded by the taxpayer, it is nevertheless entirely understandable that there has been some public and political concern about the losses; and it is right that the bank should stand ready to defend its record. It is also valuable that the bank has had consistent support from Scottish ministers on this front.
“The most important thing is that the leadership of the bank learns the right lessons from the experience of each individual unsuccessful investment; and that where necessary, it puts measures in place to address any points on which the bank’s policies, processes or actions were considered to have had any bearing on the outcome.”
The next accounts for SNIB will be published on Monday, August 24. It was announced in February that the bank’s total investment in businesses and projects in Scotland had exceeded £1 billion, following an investment in Inverness-based Aurora Energy Services. The total invested by the bank now stands at £1.15bn.
Sir John concluded in his report that a “solid foundation” has been put in place which the bank can build on over the next five years.
However, he said there are questions to resolved concerning its long-term funding sources after 2030. Sir John highlighted the ambitions of the bank’s leadership to create a “significantly larger balance sheet” than the £2bn of capitalisation from the Scottish Government and hopes to achieve this by “creating new funds in which private sector investors could participate”.
Mr Watt said: “We welcome this review and are grateful to Sir John Elvidge for the rigour, insight and care with which it was conducted, including the extensive engagement with stakeholders across the market. My thanks also go to everyone who took the time to contribute their views and experiences.
“The review recognises the scale of what has been achieved since the bank was established. Over the past five years, we have built a new institution in a period marked by significant economic uncertainty and change, while remaining focused on delivering long-term impact for Scotland.
“Importantly, the review not only reflects on our progress to date but also provides thoughtful recommendations to help shape the bank’s future development. We are encouraged that many of its themes align closely with the direction set out in our recently published investment strategy and business plan.
“While strong progress has been made, we recognise that there is more to do. We are committed to learning from the review, building on our strengths and continuing to evolve as an institution delivering lasting economic and social impact for Scotland.”
