Gov sells down majority stake in Natwest

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29th March 2022

Bite-sized business news from the UK and beyond

Good morning Shrinkflation – when items reduce in size but remain at the same price – has hit the nation’s favourite chocolate. The size of a Cadbury Dairy Milk sharing bar has been cut by 10% but is still on sale for the same price. It follows similar moves from brands like Quaker Oats, Quality Street and Jaffa Cakes, as manufacturers try to find ways to combat spiralling inflation.

Today's stories

Private hands: Gov sells down majority stake in Natwest
Awards buzz: How this year’s Oscar marked a watershed moment for streaming services

BANKING
Gov sells down majority stake in Natwest

What’s going on?
The UK government, or rather the taxpayer's, ownership in Natwest dropped below 50% for the first time since 2008 after it sold £1.2bn worth of shares in the banking giant.

Why is this important?

Natwest, formerly Royal Bank of Scotland, received a £50bn bail out in 2008 during the Global Financial Crisis when the government took a 84% stake to stop the bank failing and damaging the wider economy.

The bank, which owns banking brands Natwest, Royal Bank of Scotland and Coutts, swung back into profit last year, boosted by recovering consumer spending post lockdown. It posted profits of £4bn in the 12 months to December 2021 after making a £351m loss the year before.

Since 2015 the taxpayer has been recouping its cash and Natwest is now 48% state owned. Although the government is still the biggest shareholder, the sell down is an important landmark on the road to returning the bank to full private ownership.

Despite more than a decade of majority ownership, the government has taken a hands-off approach and allowed the bank to be run in much the same way as other privately owned banks - Natwest has paid out £1.1bn in bonuses to its bankers over the last four years.

Zooming out

The government originally bought Natwest shares when they traded at 500p, which compared to the current price of 220p, means the taxpayer has suffered a loss worth billions of pounds.

But waiting for the share price to recover to breakeven could take years.
And at a time when public finances are feeling the strain from Covid-related spending, the government sorely needs the cash with the costs of borrowing mounting.

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ENTERTAINMENT
How this year’s Oscar marked a watershed moment for streaming services

As the world continues to reel from that Oscars moment on Sunday, the awards also marked a major milestone for streaming services. In recent years Netflix and Apple have invested billions of dollars to become top contenders for prestigious awards.

Apple’s CODA became the first film by a streaming service to win an Oscar for Best Picture, beating out Netflix’s The Power of the Dog.

Why it matters: Winning an Academy Award has historically been a way for film studios to drive more ticket sales. However as streaming platforms don’t generate revenue from selling tickets, the motive is different. Alongside driving a bump in viewership on their platforms, awards are used to create prestige for their brand and attract top talent.

How do you win an Oscar, anyway? In short, very similar to how you would run a political campaign: studios and streaming platforms spend millions on billboards, magazine ads, and swanky events to persuade the 10,000-ish voting members of the Academy of Motion Picture Arts and Sciences to at least watch their film. Netflix reportedly spent £23m on its (unsuccessful) campaign to sew up the best picture award for Roma in 2019. For context the Conservative Party spend £16m on their 2019 election win.

Zoom out: While the streaming platforms spend aggressively to lock up Oscar wins, the broader public appears to be losing interest in Hollywood’s big night. Viewership has steadily declined over the past 25 years, with only 10.5m tuning in last year, compared to 55m in 1998.

Bottom line: Even if the relevance of the Oscars may be waning for most of us, the win by CODA is an acknowledgment by the most influential people in the film industry that streaming platforms should now be taken as seriously as the traditional studios.

Stat of the day

Shanghai’s 25m resident will go into lockdown this week to curb a Covid outbreak

Interesting links from around the web

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Every friendship group has at least one person known as 'the late one'. Why do some people find it such a struggle to be on time?
How to deal with criticism at work

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Gov sells down majority stake in Natwest

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