The board of directors has been appointed to the UK’s Green Investment Bank, a government-backed institution to fund renewable energy projects.

The bank was one of the first ‘green’ energy pledges made by the UK’s coalition government when it came to power in May 2010 and it will have a start-up budget from government of £3bn.

Lord Smith of Kelvin, currently chairman of utility SSE, will be the bank’s chairman, with Sir Adrian Montague his deputy. Montague has been chairing the Green Investment Bank Advisory Group.

UK business secretary Vince Cable said the bank was “a major new innovation vital to securing investment in what is one of the great challenges of our age, the decarbonisation of our energy supply. It has found two candidates of outstanding calibre well suited to leading the bank through its important early phase.”

The newly formed board will begin the recruitment of the company’s other directors and senior executive team shortly, with a view to having the bank – which will be headquartered in Edinburgh, Scotland – fully operational by the end of the year.