A cash crunch has hit the main supplier of print to Britain’s high-street banks. The future for the paper bank statement could be at risk.
Lloyds is leading a rescue effort led by the finance industry to save Leeds’ Communisis, but this weekend hopes for a salvage agreement were fading.
Interpath, a firm that provides advisory services to companies, has been placed on standby due to concerns about the increasing insolvency threat. A 1,000-strong workforce is at risk.
The fears for the future have increased after Lloyds made the unusual move of telling customers that they would be switching to online statements, without explaining why.
In a letter sent to some customers earlier this month, it was stated that “We have moved your statements off of paper and onto the internet.”
Lloyds announced that the changes will take effect at the beginning of November. The letter continued, “We are experiencing some problems and may not have the ability to send as many via post as we usually do.”
Lloyds , which ownsnewspapers and has no editorial involvement, has led a survival plan that included a two-part Interim Funding Agreement, totaling PS13m. Other major banks also participated in this plan.
Banks are required by regulatory rules to issue paper statements, or in any other durable medium, if the customer so requests. The demand for paper statement is dropping sharply. Communisis’ most recent 2021 accounts showed a decline of 20pc in the core printing business as a result of the shift to digital communication.
Communisis plunged into crisis after its American parent OSG Holdings filed for bankruptcy. The company had suffered large losses over the past few years.
The company filed for Chapter 11 bankruptcy protection for the second time within 14 months. It was able to reduce $134m in debts (£110m), from an $824m total balance sheet.
The company reported losses of almost £25 million in 2021, and £39.8 millions the previous year.
Communisis declined to comment. Lloyds declined comment.