Scottish National Investment Bank: review of performance 2026

Investment approach

54. As a publicly-funded development bank, the Bank’s overall approach to investment rests on five main pillars:

• It operates commercially, but it is able to take on more risk than mainstream private sector providers of finance, in order to fill gaps in the market in pursuit of its missions. It is also prepared to be a patient investor, rather than seeking a rapid exit from its investment.
• The minimum investment it normally offers is £1 million; the maximum normally £50 million.
• The Bank seeks to crowd in other investment from the private sector, aiming to deliver at least a 1:1 ratio at portfolio level - a target which it has comfortably exceeded in its first five years. Wherever possible, it aspires to act as a “cornerstone” investor, drawing in others, and to avoid being a “last mile” investor or a “lender of last resort”.
• In line with subsidy control requirements, it seeks to demonstrate additionality in its investments, to show that it is not crowding out private investment.
• It aims to be financially self-sustaining, without the need for Scottish Government subsidy for its running costs, and over the medium-term to achieve an overall target rate of return on its investments of 3% - 4%. It achieved the former in 2023-24, and generated an operating profit of £15 million in 2025-26; it will report on progress towards the target rate of return later this year.

55. It should be acknowledged that there are inevitably some potential tensions between seeking a commercial return and the broader goal of unlocking additional economic activity which would not otherwise have taken place. I think that the Bank has sought to navigate those thoughtfully in its first five years; and this continues to be a focus of attention. It has worked hard to communicate with stakeholders on its approach, although I found a continuing lack of clarity in some quarters around the Bank’s risk appetite. This suggests that there is scope for the Bank to do more in explaining its approach – building, for example, on its recent publication of a refreshed risk management framework.

56. It is also worth noting that the Bank does have the power to offer sub commercial finance in some circumstances, as long as it complies with subsidy control requirements. The Bank is reflective on the potential to offer sub commercial finance alongside its commercial investments going forward; and is also open to considering “blended” finance opportunities, where grant capital, for example from the enterprise agencies, sits alongside Bank commercial capital. It should be emphasised, though, that the Bank is not, and was not designed to be, a grant-giver.