EDINBURGH (Reuters) - A Scottish state-owned investment bank set to open in 2020 will help finance small and medium-sized companies and bolster economic growth which has lagged the United Kingdom as a whole, the Scottish government said on Wednesday.
The plan for the Scottish National Investment Bank (SNIB) has identified a clear gap in banking support for innovative business ideas through “patient capital” to complement private sector investment, the bank’s chief executive Benny Higgins said.
“Independent commentators view the immediate outlook for growth in the Scottish economy as languid at best, in part due to the material risks associated with the unfolding of Brexit and its consequences,” he said, speaking at a presentation of the bank with Scotland’s First Minister Nicola Sturgeon.
“By adopting a strategic focus and risk appetite that is different, the bank can fuel the economy through direct debt and equity investment, and by acting as a catalyst for private investment,” he said.
The bank will start out with an investment of 500 million pounds by the Scottish government and will aim to scale up to capitalisation of about 2 billion pounds in its first decade.
The SNIB has also held “very constructive” discussions with the UK Treasury to eventually issue financing instruments Higgins said, adding that it was also looking for “some level of gearing ... further down the line.”
Scotland’s economy will grow at a slower rate than the UK overall during the next five years, the Scottish Fiscal Commission has forecast, expanding at 0.7 percent in 2018 and 0.9 percent in 2019, versus 1.4 percent in 2018 and 1.3 percent in 2019 for the UK as a whole.
Reporting by Elisabeth O'Leary; Editing by Stephen Addison