A NEW study has warned that a state-owned bank is “unfocused and ill-conceived" - amid calls being made for a re-set of its operations.

Think tank Reform Scotland has carried out research into the Scottish National Investment Bank (SNIB) which was set up by the Scottish Government with a £2bn budget.

In his report, business expert Professor Ross Brown has claimed that the SNIB has been handed a “vague” mission and its impact has been “limited”.

Professor Brown, who is professor in entrepreneurship and small business finance at the School of management, at the University of St Andrews, has warned that the Scottish Government’s broad mission for SNIB has unintentionally prevented the firm-specific investments it needed to make.

He pointed to only seven companies having received funding from the state-owned bank so far, claiming it has created a very limited economic impact.

Professor Brown has recommended that SNP ministers should consider channeling resources to SNIB from other organisations such as Scottish Enterprise.

He said: “SNIB looks unfocused and ill-conceived, and this vagueness has created an unhelpful mission-creep. It is not an effective strategy for a publicly-owned bank, particularly given the very high levels of remuneration being awarded to the senior management team.

“Most importantly, SNIB’s strategic deficiency is reflected in the very small number of projects currently being funded by the bank, which in turn is likely to lead to a very modest economic impact in the short to medium term.”

He added: “If Scotland is to become a genuinely ambitious, entrepreneurial, so-called ‘start-up nation’, public policy in Scotland will have to become much bolder and imaginative than at present. To do this, the Scottish Government needs to hit the reset button on SNIB.

“The bank needs a clearer delineation of its core strategy and customer base. Fundamentally, the Scottish Government has to decide if the bank is designed to help develop the green infrastructure of the Scottish economy or to propel business growth in SMEs in Scotland. The two are very different objectives and using the same instrument to achieve both seems at best ill-advised and at worst foolhardy.”

Chris Deerin, director of Reform Scotland, added: “Reform Scotland welcomed the creation of SNIB and continues to believe it is a commendable and important project.

"Its early months have not been trouble-free, but this is often the case with start-ups, and in our experience it has an excellent board and a strong executive team. It is exactly the kind of big, ambitious policy experiment that Holyrood should be embarking on, and we’d like to see similar ambition and risk-taking in other areas of government activity.

“We see no reason why SNIB should not be a long-term success. And we hope this paper, in its spirit of constructive criticism, can play a small part in helping it towards that happy outcome.”

A Scottish Government spokesman said: “Over the course of the last 18 months, the Scottish National Investment Bank, the board and the executive team have built up an operational structure, recruited over 50 staff and delivered more than £200 million in investment commitments to 16 projects.

“It will continue to play a key role in supporting the development of a fairer, more sustainable economy.”