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OUT OF ORDER? ANOTHER MISERABLE DAY FOR BANKNOTE PRINTER DE LA RUE AS CASHLESS SOCIETY PUTS HISTORIC FIRM IN A BIND CHARLIE CONCHIE STORIED banknote-maker De La Rue said profits would slump below expectations and warned of a “significant degree of uncertainty” yesterday as it struggles to cope with a downturn in cash usage. In a trading update, the firm said fullyear-adjusted operating profits would come in below an initial £30m forecast after a sharp fall in demand for its banknotes over the past year. “The downturn in currency, impacting both De La Rue and the wider industry, is causing a significant degree of uncertainty in terms of outlook for the [full-year
2024],” the firm said. The demand for banknotes is lower than it has been for 20 years. Bosses said they had requested a deferral of an £18.75m payout into the firm’s pension scheme and had been forced into negotiations with its bankers to try to rejig the terms of its covenants. The firm slashed its profit guidance for next year to “the low £20m range”, down from a previous forecast of £40m. Shares in the firm collapsed more than 21 per cent after the update yesterday, with brokers at Numis placing their recommendation for the stock under review as they await the outcome of the
negotiations with lenders. “Whilst there are a number of new tenders underway, the timing of recovery remains uncertain,” said Numis analyst James Beard in a note. The profit warning underscores the struggles of the 202-year-old note printer to diversify beyond its historic staple as cash usage plummets around the country. Efforts to push into authentication and central bank products have failed to impress investors, with its share price cratering over 91 per cent in the past five years. The chief of pricing firm Updata, David Linton, told City A.M. yesterday bosses had
failed to heed the warnings of its share price and push into new terrain. “What the stock market was telling the management at De La Rue for more than a decade was that they were in longterm decline,” he said. “Did the market know something that De La Rue’s management didn’t?” Yesterday’s warning marks the latest troubles for the firm after an aggressive campaign by investor Crystal Amber – one of its biggest shareholders – calling for its chairman Kevin Loosemore to be ousted. Crystal Amber said last week that De La Rue’s turnaround efforts had “failed by every measure” in a scathing attack.
Bailey: Social media bad for bank runs JACK BARNETT ACCESS to mobile bank accounts and customers being able to flag concerns about the health of lenders rapidly via social media has raised the risk of Silicon Valley Bank (SVB) and Credit Suisse style collapses happening again in the future, Andrew Bailey warned yesterday. Speaking at an event at the International Monetary Fund’s spring meeting, the governor of the Bank of England said onhand communication channels such as Twitter and Whatsapp mean bank “runs can go further much more quickly”. Customers yanked cash from SVB last month almost instantaneously after rumours spread on social media that its huge bet on US government debt was failing . Greater likelihood of sudden and huge withdrawals sparked by speculation “must beg the question of what are appropriate and desired liquidity buffers” to help banks to survive such runs, Bailey said. SVB failed after customers wised up to the US tech lender’s massive wager on US government debt being on track to sour as a result of steep rate rises. Before it went to the wall, SVB had hundreds of billions of dollars of unrealised losses on its balance sheet. That event amplified concerns about other lenders being snagged by the higher rate framework, igniting a deposit flight at Credit Suisse. That recent string of chaos in the global banking system would not distract the Bank from trying to tame inflation, Bailey, a former head of City watchdog the FCA, stressed yesterday.
INSIDE TIME TO GET BACK IN THE OFFICE, SAYS JP MORGAN P3 EVERYMAN’S BLOCKBUSTER REBOUND P5 THE SQUARE MILE AND ME: DAN HOWE P12 MARKETS P13 OPINION P14