LONDON (Reuters) - De La Rue (DLAR.L) has drawn up contingency plans to print drachma banknotes should Greece exit the euro and approach the British money printer, an industry source told Reuters on Friday.
The news comes as EU trade commissioner Karel De Gucht said on Friday the European Commission and the European Central Bank are working on an emergency scenario in case Greece has to leave the euro zone - the first time an EU official has confirmed the existence of contingency plans.
The source, who asked not to be named, said that as a commercial printer De La Rue needed to be alive to the possibility of a Greek exit from the single currency and prepare accordingly.
Crisis-hit Greece will be led by an emergency government into new elections on June 17 which will ultimately determine whether it must quit the euro - possibly spreading financial devastation across the continent.
An exit from Europe’s single currency would spark a major demand for the returning drachma and while the country’s state printers could orchestrate its production, a handful of global firms like De La Rue could be called on to help.
Buffeted equity investors looking for respite from the Greek turmoil have been busy buying up De La Rue shares in anticipation, helping push them up 11 percent in the last month.
Panmure analyst Paul Jones said the firm would be in with a chance of work if extra capacity was needed and could also benefit from other work as Greek printers were less likely to be quoting for contracts elsewhere.
“If they (Greece) decide to pull out of the euro the first thing is it won’t be an overnight job, partly because of the implications of what they are trying to do but secondly because of the sheer number of banknotes that are needed to replace a currency,” Jones told Reuters.
“It will be a huge job which the state printing works will do, but they will probably pull in some additional volume from outside and De La Rue will be in with a chance.”
On Thursday, as rating agency Fitch downgraded Greece’s debt a further notch below investment grade to CCC, a poll showed Greek voters returning to pro-bailout parties, offering some encouragement to markets shaken by the prospect of a euro exit.
De La Rue, the world’s largest commercial banknote printer producing over 150 national currencies, told Reuters in November that regime changes and the euro zone crisis could fuel further growth for the group.
Shares in the FTSE-250 firm, which has not produced drachma in over 20 years, were up 0.3 percent at 994.5 pence by 11:20 a.m., outperforming a 0.8 percent weaker FTSE 250 midcap index .FTMC.
Additional reporting by Rhys Jones; Editing by Paul Hoskins and Mark Potter