THE news that the Scottish National Investment Bank had passed a milestone in its achingly slow development last week failed to spark much excitement about the prospect of it starting operations later this year.

The timing of the announcement that a veteran of the corporate world had been appointed to be its first chief executive attracted attention chiefly for the wrong reasons.

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Eilidh Mactaggart has been appointed to run the bank on a base salary of £235,000 after a career in infrastructure finance with the likes of ABN Amro and MetLife.

The pay package may appear modest compared to the telephone number deals that have become the norm in the world of finance. However, it was bound to attract comment when so many people are facing redundancy or significant pay cuts as a result of the devastating impact of the coronavirus on the economy.

Some critics wondered if a person with a corporate background could be the right choice for a bank that was meant to be different from the norm, with a brief to promote the development of a fairer and more inclusive economy.

Ms MacTaggart welcomed the opportunity to create an ethical and environmentally conscious bank, that would seek to benefit everyone across Scotland.

This we are told will involve it providing long-term patient capital support for ambitious companies, the third sector and infrastructure projects, underpinned by the transition to net zero carbon emissions.

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However, the announcement of her appointment included little in the way of detail to assuage the longstanding concerns about what some fear may be a costly white elephant in the making.

The bank has been formed with a budget that will be worth £2 billion over 10 years.

That kind of money could go a long way towards helping the thousands of firms in Scotland that have been left on the brink of collapse by the coronavirus.

The Taxpayers’ Alliance last year described the bank as a vanity project after the chairman’s job was advertised on a salary of £60,000 for 48 days work a year.

The post is held by financial services veteran Willie Watt who said last week: “As we emerge from the Covid-19 pandemic, we will be operating in a very different economic landscape. That is why we are pushing ahead with the creation of the Bank so that we can play our role in supporting Scotland’s economic recovery in the medium and longer term.”

Champions of the bank may argue that the launch could prove to be well timed precisely because conditions are so difficult.

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With company budgets under such strain the fear is that investment in valuable projects that do not provide a payback in the short term will be slashed. This could include investment in support of the energy transition that will be required to help tackle climate change.

However, others will argue that we cannot afford the luxury of earmarking £200m this year for an organisation that will have to spend months finding its feet.

It should be remembered that plans for the launch of the bank were announced by Nicola Sturgeon in September 2017 and many hours have been spent by members of the great and the good discussing them since then.

The theory was that the bank would go beyond the traditional role of compensating for market failure to playing a part in the development of markets that didn’t actually exist or were in their infancy. These include renewable energy.

However, sceptics have always wondered how the bank would translate such lofty ambitions into practice.

There already is a Scottish Investment Bank, created under an initiative launched by Alex Salmond in 2009. This has struggled to win acceptance amid lack of clarity about what it has brought to the table.

The sense was that the bank effectively rebadged what was already being done by Scottish Enterprise in the central belt.

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Scottish Enterprise has always had its detractors but has played a valuable role in developing schemes that have been used to harness private sector capital and knowhow to support the development of the country’s economy.

Programmes such as the Scottish Co-investment Fund have played a key role in promoting the growth of sectors such as software development and life sciences.

The launch of the new South of Scotland Enterprise this year effectively provided a vote of confidence in the development agency model, albeit combined with an acknowledgement that some regions have their own issues. The Highland and Islands area has had its own agency for decades.

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The funding landscape has also been complicated by the development of the British Business Bank in recent years. This has worked to increase the capacity of existing players such as business angels.

Against that backdrop there must be concern about the wisdom of adding a new player into the mix at a time when there has never been a greater need for businesses to be able to access support quickly.

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