It has been almost two years since Disruption Banking’s last deep dive into the Scottish National Investment Bank (SNIB). That series identified persistent conflicts of interest, governance deficiencies, and an underwhelming investment record. Rather than prompting reform, those warnings were largely ignored.
As Scotland enters 2026, the condition of Nicola Sturgeon’s £2 billion flagship investment has not stabilised; it has deteriorated. What was launched as a mission-led bank intended to drive the green transition, crowd in private capital, and reduce inequality is now defined by impairments, partial transparency, and slow-moving structural reform efforts.
Throughout 2025, those weaknesses hardened into tangible failures. High-profile collapses converted unrealised impairments into permanent write-offs, while controversy surrounding forestry investments reignited questions about additionality and public benefit. By March 2025, £785 million was committed and over £460 million deployed, exposing public capital to further write-downs.
This article finds concerns previously raised in 2023/2024 have remained largely unaddressed, and, in some areas, have intensified. Governance shortcomings endure, transparency falls short of full openness, and meaningful reform has yet to emerge. Ultimately, Scottish taxpayers bear the cost as public funds remain exposed to mounting write-downs and inaction.
2025: The Year SNIB’s Losses Crystallised
If 2023 revealed paper losses and structural cracks, 2025 marked the point at which those weaknesses became entrenched. Two high-profile portfolio companies collapsed in quick succession, turning unrealised impairments into irreversible write-offs and erasing tens of millions of public money.
The most painful hit landed in late August when M Squared Lasers, proudly billed as SNIB’s flagship and its very first investment, went into administration. The bank had committed £37.5 million in equity and loans to the Glasgow photonics pioneer. When administrators arrived, that stake was effectively wiped out. By November, the sale of remaining assets to a new founder-led company delivered zero recovery for SNIB or fellow creditor Santander. The final taxpayer bill is expected to exceed £34 million.
The scale of the loss sparked widespread outrage. Scottish Conservative finance spokesman Alexander Stewart MSP condemned the outcome: “The SNP should be promoting economic growth, slashing wasteful spending and lowering taxes, instead of taking a cavalier attitude to the loss of taxpayers’ money.”
M Squared was not the only casualty in 2025. The June failure of Krucial added another £4.6 million in irrecoverable exposure. These back-to-back failures stripped away any pretence that the bank’s troubles were merely temporary growing pains.
Broader damage was signalled in the annual accounts for the year to March 2025. The year recorded £76.9 million in unrealised losses from portfolio revaluations, with further significant hits (including these post-year-end failures) projected ahead.
By 2025, the pattern was unmistakable. Hundreds of millions had been deployed, tens of millions permanently lost, and little demonstrable public benefit delivered in return. These financial consequences ultimately rest with Scottish taxpayers.
While SNIB Lost Millions, Staff Bonuses Continued Unabated
Despite continued losses, SNIB’s bonus culture showed little restraint. In the year to March 2025, CEO Al Denholm received total remuneration of about £344,000, including roughly £89,000 in bonuses.
This approach was not new. Remuneration practices in 2025 followed a pattern established earlier in the bank’s life. Disclosures in the 2023/24 accounts, published in August 2024, showed £865,000 allocated to long-term incentive payments, even as SNIB continued to record losses and portfolio impairments.
Political scrutiny intensified in September 2025 when Holyrood’s Public Audit Committee examined the bank’s investment failures. Deputy convener Jamie Greene directly challenged civil servants on salaries and bonuses paid amid persistent losses. Officials, led by Gregor Irwin, defended the long-term incentive plan as “carefully constructed,” insisting losses in one year would be offset by gains in others.
Conservative MSP Graham Simpson sharpened the attack on overall risk tolerance, questioning whether multi-million-pound wipeouts represented an “acceptable level” for a taxpayer-backed institution.
The tension is difficult to ignore. A public institution continues to reward long-term upside while delivering short-term losses and limited realised returns. For taxpayers absorbing the downside risk, the justification for such incentives remains unclear.
SNIB Forestry Controversy: £50 Million Public Money Fuels Land Price Bubble
While crystallised losses dominated SNIB’s 2025 headlines, a separate investment decision exposed deeper structural weaknesses in how the bank interprets “mission-led” capital.
Questions over favouritism and mission alignment resurfaced when the bank committed £50 million to a Gresham House forestry fund. Promoted as a net-zero investment, it drew criticism for inflating land prices, enriching large investors, and sidelining rural communities.
Land reform analysts, notably Andy Wightman, used FOI requests to expose how the fund had amassed over 73,000 hectares, making Gresham House effectively Scotland’s second-largest private landowner. Acquisitions often came at premium rates, including a hill farm which was bought for more than £12 million (£21,000 per hectare) and a 150-year lease exceeding £14 million.
These transactions intensified concerns that public capital was fuelling a speculative bubble in land values, carbon credits, and forestry grants rather than addressing genuine market failures.
Additional examination revealed a troubling circularity in public funding: the fund had received £3.4 million in forestry grants to date, with projections reaching £11 million by 2031. This effectively subsidised returns on SNIB’s own capital and diminished net benefits for taxpayers. Community Land Scotland urged the bank to review or exit the deal, arguing it reinforced concentrated ownership rather than advancing economic development or inequality reduction.
SNIB and Gresham House defended the partnership as delivering sustainable timber, biodiversity, and woodland targets. Yet, the episode revived doubts over whether public capital addressed market failures or merely amplified private speculation.
SNIB 2026 Outlook: Will Reform Finally Arrive or Losses Continue?
As SNIB enters 2026, the verdict from 2025 is clear and damning. Long-identified problems, governance gaps, misaligned incentives, and high-risk investments, were not fixed in time to prevent losses crystallising into tens of millions wiped out.
The imminent statutory five-year review offers the best chance for real change. Conflict safeguards must be tightened, incentives recalibrated to reward actual outcomes, and investments subjected to stricter additionality tests.
Taxpayers have sunk billions into a bank meant to transform Scotland’s economy. Instead, they have received mounting write-downs, persistent opacity, and growing political disquiet.
Reform can no longer be delayed or diluted. It is now urgent. Without swift and decisive intervention, the cycle of losses and squandered opportunities that defined 2025 will persist, exacting an even heavier toll on taxpayers.
Author: Grace Sharp
See Also:
Questions Raised In Holyrood Over Conflicts Of Interest At The SNIB
SNIB Comes Under Fire In Holyrood Over Conflicts Of Interest
One Response
Have you seen this year at the national casino bank of Scotland and it’s only getting worse ? Peter Mandelson and Gregor Irwin worked together for nine years at Global Counsel from 2014 to 2023, before latter’s placement to Scottish Government, and the investment counsel at SNIB has not been wise based on the SNIB results. Private sector salaries and bonuses to waste 100’s of millions of pounds on bets on industries, together with friends and contacts, with no due diligence or internal financial controls. It looks like John Swinney, civil service and lobbying industry captures Scottish Government again.
Scottish National Investment Bank reports highest-ever loss
Scotland’s state-funded development bank has admitted the scale of losses reported by the institution is “challenging” as it posted a record deficit in its latest financial year.
New accounts published today show that Scottish National Investment Bank (SNIB) made a loss of £137.5 million in its 2025/2026 financial year, driven by the failure of three investments made in the early years of the institution.
It follows a loss before tax of £58.4m posted by the bank in the previous year, when it recorded a “paper loss” of £77m on the revaluation of its investments.
The new report has sparked fresh criticism for the bank among its detractors, who have expressed concern over the scale of the losses it has made since its inception.
Craig Hoy, finance spokesman for the Scottish Conservatives, declared that the “eye-watering losses raise serious questions about how the SNP’s flagship Scottish National Investment Bank is operating”.
Mr Hoy said: “Taxpayers are repeatedly having to foot the bill for failed investments, while staff continue to take home huge salaries.
“SNIB is supposed to be a crucial vehicle for driving economic growth in Scotland but will be impossible to achieve if these losses continue to escalate.
“SNP ministers must ensure those at the top of SNIB are carrying out due diligence before making their investments to ensure that taxpayers get value for money, instead of having to pick up a hefty tab for when companies go under.”
The latest SNIB deficit, which comes days after an independent report by Sir John Elvidge found the bank made £110m of losses in its first five years of operation, includes realised losses of £65.1m. These losses relate to the bank’s investments in three companies which ultimately failed, M Squared Lasers, R3 IoT, and Trojan Energy.
The deficit in the bank’s latest accounts also reflects unrealised losses of £84.7m due to write-downs on the value of some investments. In the report, the bank states it has “recorded fair value provisions against a further seven of its investee companies, some of whose value it does not expect to recover”.
Further losses are expected to be incurred by the bank in its current financial year following the collapse into administration of two further investee companies, Orbex and PneumoWave in the 2025/2026 period. The administration processes for these two companies were not completed by year-end on March 31, with the bank facing a loss on its £29m investment in Orbex, the Scottish rocket manufacturer and launch services provider.
David Ritchie, chief executive of SNIB, told The Herald that “this is a challenging set of results for the bank”.
“The loss position is challenging,” he said. “While the losses captured within that have previously been announced — such as Trojan, M Squared, Orbex — this is the first time that we’ve brought them all together on an annual-reporting basis. So, it does create some challenges and makes us quite thoughtful about the future strategy of the organisation.”
The new accounts reveal the bank committed the largest amount of capital to Scottish businesses in a single year since it was founded in November 2020, at £374m, with a further £445m crowded in from private investors. Investment deals last year included 15 new and 24 follow-on investments.
The bank has now committed more than £1.2bn, and crowded in a further £1.9bn of private capital, to 53 Scottish businesses and projects.
Excluding losses, the bank generated an operating profit of £12.3m in its latest financial year; investment income fell by 6.4% to £32.3m but was ahead of forecast while costs of £20m were below budget.
Mr Ritchie said that “there have been some positive things that we’ve done over the course of the last year”.
“Recording the operating profits is something that we are particularly proud of,” he said. “I think it demonstrates that we are running the business in a tight, cost-responsible way, which I think is important for a public body, and that’s the third year in which we’ve done that.
“We have managed to commit all our capital this year as well. We deployed the full allocation, and then we’ve had a record level of commitment, which is £374 million. [That] shows the demand for an organisation like ours in terms of supporting businesses and projects.
“We continue to deliver impact in terms of the jobs that we’re supporting. Our reach is into 28 local authorities of the 32, so we’re not just focused on the central belt or the big cities. We’re really excited about what the next five years bring.”
Asked whether the bank would change its approach in light of the losses it has reported, Mr Ritchie, who succeeded Al Denholm as chief executive in January, said: “I think the first thing on the losses is that we are a development bank. We’re taking development-bank risk and trying to support a number of businesses which have unproven technology, where new markets are yet to be established. Therefore, there’s a risk associated with that. If a development bank is not leaning into that space, then there’s a different conversation that should be happening.
“The second part is that more than 90% of the losses we are reporting were investments that happened in the first three years of the bank’s activities. If you think about those first three years, we were just launching the organisation and thinking about how we could best engage and serve the market. It was on the back of Covid when business and investor confidence and sentiment were challenging.
“The macroeconomic context in which we were operating was almost like a generational event: high inflation, challenging interest rates, liquidity challenges within the market itself, all of which have an impact on the success of a business as well as other investor appetite. Those are important points I would make around the losses in that part of the bank’s existence.”
Mr Ritchie added: “To your point around the investment strategy and what we do now, I see the investment strategy as a dynamic thing that evolves. It’s not something that we want to take a complete handbrake turn on and change our focus within the market.”
Mr Ritchie said he has met Stephen Flynn, Cabinet Secretary for the Economy, Tourism and Transport since his appointment to the Scottish Government after the election in May. Asked if the minister, who effectively replaced Kate Forbes in the brief, has asked the bank to change its approach in any way, Mr Ritchie replied: “We have a really close working relationship with our shareholder, and we’re incredibly grateful for the capital they provide and the support they give us.
“I’ve had the opportunity to meet with Mr Flynn. He has been a supporter of the bank and he’s keen to work with the bank. But what I would say is that Scottish ministers have never interjected into operational matters or asked us to look at particular investments or move into specific sectors.”
Glasgow-based M Squared Lasers was the first investment made by SNIB when it launched in November 2020 with a £2 billion war chest to invest over 10 years in Scottish firms that aligned with three founding missions: to support the transition to net zero, to harness innovation, and to tackle place-based inequality.
However, M Squared collapsed into administration in August last year, leaving SNIB with a £34m exposure after it had made a series of investments in the business. Trojan Energy, which designs and builds kerbside charging solutions for electric vehicles, changed hands in a pre-pack administration deal in February this year. The Aberdeen-based company had drawn down £26m of the £28m committed to it by SNIB at the time of the pre-pack, putting the bank on course to make a loss from its investment.
SNIB had invested £4.6m in R3 IoT, a satellite technology business that traded as Krucial, which called in the administrators in June last year.
SNIB chairman Willie Watt said that investment losses “will always be present in a development bank portfolio, with a mandate to take on higher risk”.
“However, the scale of the realised losses taken together with the provisions made against the portfolio is challenging, ” he added. “Many of these losses relate to the first three years of the bank’s existence and predate tighter investment conditions that were introduced in 2023.”
https://www.heraldscotland.com/news/26474752.report-highlights-scottish-national-investment-bank-losses/