Why the Green Investment Bank should be located in Edinburgh
31 Mar 11 - Martin McAdam, CEO
Edinburgh is a powerhouse of the financial industry. It is not
just major banks that have located here, there are a plethora of
smaller and mid-sized financial organisations that support
Edinburgh as a strategic financial destination. While banking
experience is important, the experience located in the support
industries such as investment management, corporate finance,
insurance, strategic tax planning and also in the legal profession
that also help structure and "paper" the deals is what makes a
great financial centre.
Edinburgh is the second largest financial centre in the UK after
London and is the fourth largest in Europe. Despite the financial
turmoil and the back-lash against bankers, the international
financial services industry based in Scotland has a long-held
reputation for innovation and excellence.
The clue is in the name
The clue for the role of the Green Investment Bank (GIB) is in
the name "Green". That role should cover everything from energy
efficiency to technology development. But what areas should the
bank look to finance? Well the GIB must focus on areas where there
is market failure - otherwise it will compete with the commercial
banks and we certainly don't need the GIB to do a job that the
commercial banks are already prepared to do.
The marine industry is a perfect example of the role for the GIB.
The first arrays of devices will require project equity, capital
grant support and debt. The technologies will be regarded as higher
risk until they are deployed in volume. The GIB has a role in
ensuring these projects get financed and nursed through the early
stages of commercial deployment. Projects up and running with
proven cash flows can then refinance and bring in the commercial
banks when the risk profile of the projects matches the commercial
Putting together financial products that match the profile of the
marine energy industry will be a challenge. It will require
quality strategic thinking and innovation - maximising the
opportunity for Scotland's renewable industry while mitigating the
risks from early stage technologies. Edinburgh is up to this
challenge. Scotland has the bulk of the marine energy resource in
the UK and locating the GIB in Edinburgh makes sense from an
opportunity and industry perspective.