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Publication - Report

Scottish National Investment Bank: consultation report

Published: 28 Feb 2018
Directorate:
Chief Economist Directorate
Part of:
Economy
ISBN:
9781788515856

Analysis of the Scottish National Investment Bank consultation.

43 page PDF

481.6 kB

43 page PDF

481.6 kB

Contents
Scottish National Investment Bank: consultation report
10. Governance and operations (Question 7)

43 page PDF

481.6 kB

10. Governance and operations (Question 7)

This section analyses respondents' opinions regarding what possible governance and operational strengths and weaknesses could enable or constrain the success of the Bank.

Respondents were asked, "Are there particular issues on governance and the operational model, including issues such as public/private classification that you think would strengthen, or constrain, the Bank's ability to deliver on its mission?". There were no predefined answers to select so this was a fully open question.

261 respondents (65%) provided commentary on this question, 222 (85%) of those responses were considered valid. Responses generally fell within broad themes. Each of these are explored in further detail below, based on the frequency of response.

Classification

While a small number of respondents had contrary views, many respondents remarked that the Bank should be a public sector, arms-length organisation.

Management and oversight

The structure and composition of the Bank's board, and its oversight structures, were identified as key considerations by many respondents. It was recognised that individuals with strong financial sector credentials should have a role in the management of the Bank, but several respondents were keen to ensure that this was balanced with oversight and input from the public sector and individuals from other private sector industries. It was noted that the Board should be gender-balanced.

Some expressed the view that there should be independent oversight from Civic society involved in the Bank, with possible stakeholders including trade unions, professional bodies and the charity sector. As well as this, it was noted that it was important for the Board to represent Scotland's regions, in order to try and establish a regional perspective on the Bank's activity.

The Bank's accountability to Scottish Government was also discussed, with some respondents keen to ensure that the Bank was wholly responsible for its activities to Ministers and Parliament. Audit Scotland was noted by one respondent as having a potential oversight role.

Independence of operations

Some respondents reported that the Bank should be independent, but ultimately publicly owned. Others were wary that, as a public body, the Bank and its investment decisions could be susceptible to political pressure. Some were of the opinion that, after establishing the Bank, and setting its terms of reference, Ministers should maintain a light touch approach to their involvement in the Bank.

Partnership and collaboration

The need for the Bank to engage with a range of other stakeholders was referenced throughout the consultation. Some respondents noted a range of potential partners for the Bank, including communities, Scotland's financial sector and social enterprises, as well as Scotland's existing enterprise agencies.

Remuneration

A small number of respondents noted that the salaries and remuneration packages offered to employees of the proposed Bank should be restrained, avoiding the higher salaries often associated with careers in banking.

Policy alignment

A small number of respondents noted that the Bank's investment strategy and vision should be aligned with key policies at a Scottish, UK and international level, for example the Climate Change (Scotland) Act, or UN climate agreements. This desire was balanced against other respondents who were hesitant about significant political involvement in the Bank.

Opposing views

A small number of respondents expressed the view that the Bank should not be publicly owned. Furthermore, a small number also remarked that the model replicated existing functions and organisations, and so shouldn't be established at all. They also noted that it would interfere in the smooth running of the free market, to Scotland's detriment.

Summary

This section analyses respondents' views on the governance of the Bank. Clear principles emerging from this section highlight the need for the Bank to:

  • Be a public-sector arms-length organisation;
  • Be managed by individuals with strong financial sector credentials but this should also be balanced with oversight and input from the public sector and individuals from other private sector industries;
  • Engage with key stakeholders to shape the Bank's focus and activities;
  • Carefully manage the salary and remuneration packages offered to employees given the public sector angle to the Bank; and
  • Align its investment strategy with key policies at a Scottish, UK and international level.

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