Scottish state bank records £138mn loss on back of failed investments

{"text":[[{"start":9.6,"text":"Scotland’s state-backed development bank recorded a “challenging” net loss of £138mn, the fifth consecutive full-year loss since it was set up, driven by portfolio writedowns and the failure of five companies it had backed."}],[{"start":22.52,"text":"David Ritchie, chief executive of the Scottish National Investment Bank (SNIB), said he expected “commentary” about the results covering the 12 months to the end of March but that the lender had to pursue its remit as a “patient” investor."}],[{"start":35.04,"text":"“It’s challenging, and we fully expect there to be comment on that . . . and understandably,” Ritchie told the FT."}],[{"start":41.9,"text":"The latest loss, confirmed in accounts published on Monday, exposes the tension in the mandate of the bank, which was created in 2020 during the Covid-19 pandemic by the Scottish National Party-led government."}],[{"start":54.12,"text":"It is required to serve as a higher-risk investor for sectors struggling to attract commercial interest while minimising taxpayer exposure to financial losses."}],[{"start":62.96,"text":"As an “impact investor”, the bank aims to deliver both commercial returns and investment into net zero technologies, innovation and nationwide growth across Scotland."}],[{"start":72.8,"text":"Ritchie, who has been in post since January, said 90 per cent of the losses recorded in 2025-26 related to investments made during the bank’s first three years after its launch, before tighter conditions were introduced in 2023."}],[{"start":87.32,"text":"Launching during the pandemic had fostered “challenging investor and business sentiment” and “significant macro challenges” in terms of inflation and interest rates, he added."}],[{"start":97.48,"text":"SNIB realised losses of £65mn connected to the failures of space-tech start-up Krucial, laser manufacturer M Squared and Trojan, an EV infrastructure firm."}],[{"start":null,"text":"

"}],[{"start":108.32,"text":"The bank also recorded unrealised losses of £85mn from writedowns, including anticipated losses from the failure of medical technology developer PneumoWave and rocket company Orbex. Its collapse in February was a blow to the UK’s ambitions to see a British rocket launch from a domestic spaceport."}],[{"start":126.6,"text":"The bank was engaging with the companies it had invested in to “maximise value”, with some writedowns expected to recover, Ritchie said."}],[{"start":134.96,"text":"The Scottish government, which has committed to capitalise the bank with £2bn in its first 10 years, said the results reflected SNIB’s “role as Scotland’s mission-led development bank, and the nature of investing to deliver long-term economic, social and environmental benefits”."}],[{"start":152.28,"text":"SNIB committed £374mn into Scottish businesses and projects in 2025-26, its largest allocation since it was set up, alongside £445mn of outside investment."}],[{"start":167.36,"text":"It has now committed £1.2bn to 53 businesses and projects, attracting a further £1.9bn in private sector investment since launch."}],[{"start":177.64,"text":"Last week, an independent report into the bank’s performance in its first five years said financial losses were to be expected as it was investing in “propositions that might not otherwise take flight”. Failures tended to materialise quicker than successes, it added."}],[{"start":192.36,"text":"However, the report, which was written by former civil servant Sir John Elvidge, described taxpayer concerns as “entirely understandable” and called on the bank to learn “the right lessons” from failed investments."}],[{"start":203.76,"text":"SNIB, which introduced tighter investment conditions in 2023, also published a new investment strategy last month that introduced more rigorous commercial terms."}],[{"start":214.44,"text":"Ritchie, who was previously chief strategy officer at the lender and an adviser to Scottish ministers, said these included criteria around investing in later stages of technological development and stronger commitments from co-investors to diversify longer-term funding for portfolio companies away from the bank."}],[{"start":232.12,"text":"SNIB has also shifted its focus to energy security through, for example, electricity grid and battery storage projects and has taken a more “sector-agnostic” approach to widen its scale-up investments beyond technology- and science-related businesses."}],[{"start":246.72,"text":"SNIB’s “really strong” portfolio was expected to generate “positive” exits, Ritchie said, but the bank should not rush into sales."}],[{"start":254.32,"text":"“We’re keen to try and help them enable their maximum potential, not just in the commercial [sense], but also in the overall impact that they can have,” he added."}],[{"start":267.76,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1787546470_9204.mp3"}