Scotland's state-backed investment lender recorded another annual loss, intensifying scrutiny over its funding strategy and the risks tied to public money. The Scottish National Investment Bank (SNIB) posted a net loss of £138 million for the fiscal year ending March, marking the fifth consecutive full-year deficit since its creation. The red ink was driven primarily by portfolio impairments and the collapse of five portfolio companies.
The latest result underscores the inherent tension between the bank's policy-driven mandate and its obligation to limit taxpayer losses, as highlighted in a recent report. Established in 2020 by the Scottish Government during the pandemic, the bank was designed to channel risk capital into sectors struggling to attract commercial financing, while still aiming to shield public funds from excessive downside.
Chief Executive David Ritchie acknowledged the scrutiny over the latest numbers but stressed the bank's role as a patient investor with a long-term mission. He noted that roughly 90% of the losses booked in the 2025-26 fiscal year trace back to investments made in the institution's first three years, when the economic backdrop was far more challenging. Investor and business confidence were weak, and the combination of inflation and high interest rates made deployment difficult. Stricter investment approval terms were only introduced in 2023.
SNIB has confirmed realised losses of £65 million tied to the failures of space tech startup Krucial, laser manufacturer M Squared, and electric vehicle infrastructure firm Trojan. Additionally, the bank took £85 million in unrealised impairments, including expected losses on investments in medical technology developer PneumoWave and rocket company Orbex. Orbex's collapse in February not only hit the bank's portfolio but also set back UK efforts to launch domestically built rockets from its own spaceports. Ritchie said the bank remains engaged with its portfolio companies to maximise value, adding that some written-down assets could still recover in the future.
The Scottish Government framed the results as consistent with the bank's role as a mission-oriented development lender, reflecting the trade-off between investment and long-term economic, social, and environmental returns. Edinburgh has committed to injecting £2 billion into the bank over a decade. In the 2025-26 fiscal year, SNIB deployed £374 million into local businesses and projects, its largest annual outlay since inception, while attracting £445 million in co-investment from external partners. To date, the bank has committed £1.2 billion across 53 companies and projects, catalysing an additional £1.9 billion in private sector investment.
Ongoing losses have fuelled debate over the bank's investment model and the exposure of taxpayer money. An independent review of the bank's first five years, released last week, argued that financial losses were partly foreseeable given its focus on projects that might otherwise struggle to secure funding. The report, authored by former UK civil servant Sir John Elvidge, also noted that failures tend to surface faster than successes. It acknowledged public concern over losses as "entirely understandable" and urged the bank to learn from its missteps.
SNIB has already begun adjusting its approach. It tightened investment criteria in 2023 and unveiled a new strategy last month featuring stricter commercial terms. Ritchie said the updated standards place greater emphasis on companies at later stages of technology development and require co-investors to contribute more capital, reducing long-term reliance on bank funding. The bank is also prioritising energy security, focusing on grid and battery storage projects, while broadening its scaling strategy beyond tech startups to other sectors. Ritchie expressed confidence that the existing portfolio holds strong potential for positive exits, though he made clear the bank is in no rush to sell assets. "We are committed to helping our portfolio companies reach their full potential, not just commercially but also in the broader social value they can create," he said.