Scott Wright: Sudden exit of boss raises questions about Scotland’s investment bank

THE Scottish National Investment Bank has been no stranger to criticism in its short life.

But the news that broke on Friday, which seemed to be quietly posted on the bank’s website, that chief executive Eilidh Mactaggart had stepped down with immediate effect is likely to invite even closer scrutiny of the nascent institution.

Ms Mactaggart, an infrastructure funding specialist who previously worked for MetLife Investment Management, Commonwealth Bank of Australia and ABN Amro Bank NV, had been in post for less than two years. She had been appointed on a salary of £235,000 in April 2020 – ahead of the bank’s official launch in November of that year – making her one of Scotland’s highest-paid public servants.

SNIB offered no explanation for her departure in the statement posted on its website on Friday, and declined to comment on why Ms Mactaggart had stood down when contacted by The Herald. The only direct reference made by chairman Willie Watt, a veteran player on the Scottish investment scene, about Ms Mactaggart in the statement was to thank her on behalf of the board “for the contribution she has made as we successfully launched the Scottish National Investment Bank”.

“We have a strong team in place that remains focused on investing to deliver growth, jobs and enhanced social and environmental benefits for the people of Scotland,” added Mr Watt in the statement, which confirmed that chief financial officer Sarah Roughead had assumed Ms Mactaggart’s duties until a permanent successor is appointed.

As farewell tributes go, it was hardly fulsome, and perhaps hints that all may not have been harmonious behind the scenes, particularly given the unwillingness of the bank to expand on the reasons behind Ms Mactaggart’s exit. It is unclear whether Ms Mactaggart has another job to go to, and if she will be entitled to a severance package.

The abrupt departure of SNIB’s first chief executive so early in the life of the institution will do nothing to dispel the concerns of critics who in its short existence have questioned the progress the bank has made since its launch amid much political fanfare in 2020.

The bank officially launched on November 23, 2020 with a warchest of £2 billion from the Scottish Government to deploy patient capital over a 10-year period to Scottish companies directly involved in three distinct missions laid out by SNIB: supporting the transition to net zero, tackling “placed-based” inequality, and harnessing innovation.

And First Minister Nicola Sturgeon made it explicitly clear that much was expected of the new organisation.

“The Scottish National Investment Bank will help to tackle some of the biggest challenges we face now and in the years to come, delivering economic, social and environmental returns,” she declared in a statement marking its launch. “The launch of the bank is one of the most significant developments in the lifetime of this parliament, with the potential for it to transform, grow and decarbonise Scotland’s economy,” she added.

So far, the bank has deployed nearly £200 million of capital, its most recent investment being a funding deal of £30m to help expand Aberdeen Harbour and strengthen its position as a key hub for the energy transition drive.

However there has been criticism at times over the speed of the bank’s delivery in supporting emerging businesses. Some have questioned the need for a public investment bank at all, given the broad investor base that already exists for backing up-and-coming companies in Scotland, while others have said SNIB is duplicating a role played by Scottish Enterprise, the country’s main economic development agency.

Mr Watt, who formerly ran Martin Currie and the 3i investment company, delivered a robust, line-by-line response to these criticisms in an interview with The Herald in November, and in fairness his arguments did not lack validity.

He made the salient point that it takes time to build an institution such as an investment bank from scratch, from meeting the necessary regulations to assembling an investment team.

And he offered a cogent explanation as to why the role envisaged by SNIB differs from that of Scottish Enterprise, in terms of the type of investment each offers. He also revealed that people at other public development banks around the world had informed him that people had shown “impatience” towards them, too, in the early days of their organisations.

“Certainly, we have experienced that impatience,” Mr Watt said.

“But I think it’s really important that we put the team in place… There has been a lot of criticism of the wrong kind of public investment in our country, so we are very clear we have got to have the right skills and the right people to make the right decisions.”

The arguments advanced by Mr Watt seemed reasonable to the outside observer. And since then the bank does seem to have upped its investment activity.

In addition to the Aberdeen Harbour deal, SNIB in January announced that it had invested £4.45m in Highland Coast Hotels to “support more sustainable and community-led hospitality” along the hugely popular North Coast 500 tourist route, with a view to supporting jobs and businesses in the area.

January saw it provide £20m of cornerstone funding to Lothian Broadband Group as part of its efforts to boost internet connectivity in rural areas, which followed a £3m investment to support the development of 25 family homes for social housing tenants and first-time buyers in Nitshill, Glasgow.

SNIB also announced in November backing of £13m for the Iona wind partnership, which aims to provide 800 megawatts of onshore wind capacity in Scotland by 2026.

Whether the recent flurry of investment deals will satisfy critics who argue the SNIB is not moving fast enough remains to be seen, particularly given how urgent it is to foster growth as the economy recovers from the shock of the pandemic. Perhaps of more concern at the moment is the sudden departure of a chief executive less than two years after joining and the unwillingness of top brass to explain why.

Of course, there are many reasons why someone may decide to leave a job. It may well be that Ms Mactaggart, having seen the bank get up and running, felt it was time to move on to something new.

Perhaps she has secured another role in the private sector, and there may be contractual reasons why no light has been shed on the reasons for her departure from SNIB.

But given SNIB is so heavily funded by public cash, taxpayers do deserve an explanation as to why one of Scotland’s highest-paid publicly funded employees has suddenly left her post.

This is all the more necessary given the large amount of money that is being invested in the institution, and the huge emphasis that has been placed on it at the highest political level to contribute significantly to Scotland’s economic future.

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