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
