World's largest printer of money is running out of money

Despite the rise in digital payments, cash is still king in uncertain times — but who's going to print it?
Image: British banknotes
If De La Rue’s worst-case scenario were to play out, it would mark the end of a more-than-200-year run for the company and force the 140 countries it does business with to look to other commercial printers.Leonhard Foeger / Reuters file

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By Alyssa Newcomb

In the United States, the task of printing money and minting coins falls to the Bureau of Engraving and Printing, which is part of the Treasury Department. But in the United Kingdom, a private company prints the nation's bank notes and passports — and it is running short of cash.

De La Rue, which has printed banknotes for the Bank of England since 1860, and also prints currency for 140 other countries, last week issued a warning that there was “significant doubt” about its future.

It is the largest commercial printer in the world, produces passports for 40 countries, and has designed 36 percent of all banknote denominations in circulation, according to investment research company Edison Group.

Yet the company reported lackluster 2019-2020 half-year financial results, and has lost 20 percent of its value just in the past week.

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“There can be no denying that De La Rue’s finances look precarious," said Russ Mould, investment director at A.J. Bell.

Despite having major contracts, De La Rue has suffered two major setbacks in the past year that have thrown the company’s future into question. In 2018, De La Rue lost the contract to print the United Kingdom’s new blue passports after Brexit is completed. That contract went to Gemalto, a German company.

"With a contract value of approximately £260 million, this will deliver significant savings compared to the £400 million contract awarded in 2009 and provide value for money to the taxpayer,” the UK Passport Office said in a statement. The contract is also expected to create new jobs at Gemalto’s UK office.

De La Rue also wrote off £18 million last year after Venezuela's central bank failed to pay the company for its services.

If De La Rue’s worst-case scenario were to play out next year, it would mark the end of a more-than-200-year run for the company and force the 140 countries it does business with to look to other commercial printers to produce their nation's currency.

De La Rue got its start printing currency in 1860, including £5, £1, and 10 shilling banknotes in color, for Mauritius. In 1862, the company won the contract for the only U.S. stamp ever printed abroad. The stamp, which was for the Confederate states, featured Jefferson Davis and was known as the “Five Cents Blue.” During World War II, the company printed currency for occupied allies, and hid it in a quarry until it could be picked up after the war ended.

Over the past few years, De La Rue has invested heavily in printing polymer banknotes, which are more difficult to forge and stay cleaner than traditional banknotes. De La Rue printed England’s first polymer banknote, the Sir Winston Churchill five-pound note, in September 2016.

“It is possible that — in a very worst case — the government would find a friendly buyer, presumably a domestic one with security skills and existing links to the Ministry of Defense and Home Office," said Mould. “Hopefully, it won’t come to that and De La Rue has enough breathing space to trade through its current difficulties.”

Despite the rise in cashless payments, the market for cash is expected to continue to grow. The amount of banknotes in circulation is expected to increase annually between 3 percent and 4 percent, according to Edison, exceeding gross domestic product growth rates in most areas. The reason: In uncertain times, cash is still king.