Investigation At Banknote Makers Over Poor Paper Quality

The world's largest banknote printer has begun an investigation after it was forced to suspend production at one of its factories in the UK.

De La Rue, which prints notes for the Bank of England and 150 other countries, said certain paper quality specifications had not been met at its Overton facility in Hampshire. It has suspended production and the shipment of the type of paper involved, but has not provided further details.

Shares fell to a three-low yesterday as the company warned that its paper revenues are likely to be "materially lower'' than expectations. The stock fell another 2% today.

Analysts are fearful that the problems will damage the company's reputation with central banks. As well as banknotes, the company is a supplier of security documents such as passports, authentication labels and fiscal stamps. It is also a provider of cash sorting equipment to central banks.

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