Threadneedle Street tenders £1bn note deal

Michael Bow
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THE Bank of England is asking companies to compete for a licence to print money after re-tendering its £1bn bank note production contract for the first time in a decade.

The Bank, located on Threadneedle Street in the City, has placed an advert in the Official Journal of the European Union asking bank note printing firms to bid for a 10-year contract running from April 2015, to print its bank notes.

The current contract is held by FTSE-listed UK firm De La Rue, which inked the original the deal back in 2003.

Last night the company told City A.M. it would be bidding again for the contract and hoped to win.

"We're definitely going for it. We have a good relationship with the Bank but we're not resting on our laurels," a spokesman said. "The Bank is very important for us and we'll do everything we can to retain the business. From a prestige point of view, we're a UK PLC, so it's very important."

Under the terms of the deal, the winning bidder would be licensed by the Bank to run a 200-man production facility in Debden, Essex, a site ultimately owned by the Bank but leased to De La Rue.

The company would be responsible for printing about 12bn banknotes over the life of the contract, with a face value of £1bn.

The potentially lucrative contract runs for 119 months with an option to extend it for another 36 months. With all caveats met, it is likely to expire in February 2025. The tender closes on 31 January 2013.

Other firms that could be in the running are German outfit Giesecke & Devrient (G&D) and French printer Oberthur.

Reports earlier this month also suggested Canadian-owned Swiss printer Landqart was preparing to float in London, putting it into competition with De La Rue.

The loss of the Bank of England account would be a major blow for De La Rue, which has printed UK notes since 1914.

Numis analyst Charles Pick earlier this month said it was "inconceivable" the Bank of England would consider printing its bank notes abroad.

De La Rue posted a nine per cent rise in underlying pre-tax profits two weeks ago despite a delay in some of its customer contracts.