The group could pick up a seven-year contract to print 1bn sterling banknotes annually.

The Bank said its preferred option was to sell the operation, which employs 250 staff, to a commercial firm. The sale would allow the plant to take on outside work.

The decision follows a review started by the Bank Of England in February (PrintWeek, 15 February), which was prompted by a halving of output since the 1950s.

Negotiations will now take place and definitive contracts are expected to be signed next spring, subject to any regulatory approval that may be required.

De La Rues banknote-printing plant in Gateshead will operate as a separate facility focusing on specialist short-run export work.