SNB Says Invalid 1,000 Franc Banknotes in Circulation

Some 1,800 invalid Swiss 1,000-franc banknotes worth 1.8 million francs ($2 million) have been in circulation since autumn 2012, the Swiss National Bank (SNBN) said.

The banknotes were stolen during production at Orell Fuessli Holding AG (OFN) and haven’t been through all stages of printing, the Zurich-based SNB said in a statement today, adding that Switzerland’s Federal Prosecutors Office is investigating the matter.

The SNB said it will reimburse holders of such banknotes with Orell Fuessli covering the cost. The invalid banknotes can be identified as they have no serial number or the serial number has been subsequently printed onto them.

Switzerland’s 1,000-franc note is among the most valuable banknotes in the world. More than 36.7 million of such notes were in circulation at the end of July, according to the SNB. Orell Fuessli, in which the SNB holds a 33 percent stake, has supplied the central bank with banknotes since 1911.

Orell Fuessli, based in Zurich, said is liable for losses incurred by customers, according to a separate statement. The resulting charge was taken into account in the company’s profit warning on Sept. 9, when it said it may post a loss of 8 million francs this year amid a “severely depressed” business after a client made complaints on printing errors.

London Arrests

“Orell Fuessli is the only banknote producer in Switzerland, the SNB is its biggest customer and an important shareholder,” SNB President Thomas Jordan said by e-mail, adding that the central bank will continue to collaborate with the company.

Suspicious notes first turned up in a London exchange office in October 2012, according to Orell Fuessli. Two men, who were in possession of 37 invalid notes, were arrested by U.K. authorities at the time, Switzerland’s Federal Prosecutors’ Office said in an e-mailed statement.

The confiscated notes didn’t have serial numbers or micro perforation, the prosecutor said. In the past two weeks, another 17 notes were seized in Switzerland, according to the statement.

One of the arrested men had been living in Switzerland and was sentenced to seven months in prison in London, according to the statement. A colleague of this man was arrested in Zurich in April and was released from custody in June. Investigations against the two accused people and any others involved in the case will continue, the prosecutor said.

To contact the reporter on this story: Corinne Gretler in Zurich at cgretler1@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net

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