De La Rue overlooked for part of UK plastic banknote work

LONDON, Dec 18 (Reuters) - British banknote printer De La Rue lost a slice of business in its home market on Wednesday after the Bank of England said Innovia Security would provide the plastic for a new type of banknote.

Britain on Wednesday became the largest economy so far to adopt plastic banknotes, which the Bank of England said would last twice as long as paper currency and save it around 100 million pounds over 10 years.

De La Rue (Other OTC: DELRF - news) said the deal to provide polymer substrate for the notes represented less than 10 percent of the overall contract value. The Bank of England put the total value of providing substrate and printing the notes at 1 billion pounds ($1.62 billion) over ten years.

Innovia Security is an Australian division of UK-based Innovia Group.

Rivals are trying to dislodge De La Rue as the printer of British banknotes, a contract it has had since 2003, when its present contract expires in 2015.

Other expected bidders for the work include Munich-based Giesecke & Devrient, and a consortium of G4S (LSE: GFS.L - news) and France's Oberthur Technologies.

Shares in De La Rue were down 0.9 percent by 1500 GMT, underperforming the wider FTSE 250 index, which was up 0.4 percent.

Stockbroker Numis said it still expected De La Rue to retain the overall Bank of England printing contract.

"Few parties have the capabilities to undertake such a large banknote print contract and no other commercial printer has expertise at printing both paper and plastic substrates," it said in a note.