Euro launch lifts security firms

Prepare to see people like him everywhere

By BBC News Online's Jorn Madslien

If you want to know what the streets of Europe's cities are going to feel like during the next few months, take a trip to Luxembourg.

The smell of money in Luxembourg: an overpowering illusion

Here in the Grand Duchy, the streets are lined with banks, as well as with shops brimming with luxury goods.

Armoured security cars litter the streets, ferrying large amounts of cash from bank to shop, from shop to bank, or from bank to bank.

The smell of money is intense - or perhaps it is merely an illusion?

Front loading

In the next few months, this smell will spread from city to city as an army of security guards gears up its operations across the 12 countries that have adopted the euro as their currency of choice.

Long-term it will not impact the development of the business

Thomas Berglund
chief executive
Securitas

On 1 September, the coin shipments will begin as part of the European Central Bank's strategy of frontloading, or early distribution, with notes distribution starting in November.

The security trucks will ferry more than 664bn euros worth of coins and notes, that is 14.5bn banknotes and 50bn coins to banks, cash point machines and shops to get ready for the physical euro launch on 1 January 2002.

During the same period, several hundred tonnes of obsolete national notes and coins will have to be transported back to the banks for safe disposal, so the armoured trucks will not return empty.

During this period, large amonts of cash will be stored in shops and in small bank branches, many of which will not be geared up to make sure the money is safely kept.

Busy winter

It will be an intense period for Europe's security firms which have been preparing for several years for the physical euro launch, or e-day, on 1 January 2002.

In Belgium, we will have more bank notes and more coins than we have with the Belgian franc

Stephane Bocque
marketing manager
Group 4 Falck

In Belgium, the security firm Group 4 Falck has boosted both its cash-in-transit (CIT) workforce and its secure vehicle fleet by about 20% in the last few weeks to make sure it can cope, marketing manager Stephane Bocque told BBC News Online.

"It will keep us busy at a high level until April or May next year," he said.

Too busy, according to some, with security guards in several European countries fearing a rise in robberies, and some even threatening strike action that could disrupt the smooth running of the CIT sector's operations.

"That's a legitimate worry," said Mr Bocque with regards to the guards' crime concerns, though he stressed that modern security technologies and revised routines have in recent years almost eliminated injuries among security staff transporting money.

Hower, "you will always face fools who think they can get easy money by killing someone", according to Jacques Godefroymont, general secretary of the European Security Transport Association.

"There will be robberies, of course. And a lot," he told BBC News Online, proposing an early frontloading from shops and banks to the people of Europe to reduce the risks of hold-ups, particularly of retailers.

Quiet spring

In addition to the security concerns, the euro launch has presented the CIT sector with a logistical nightmare.

Potential robbers may get their fingers burnt by modern technology

To cope with the peak demand for security guards and armoured trucks, they have had to invest large sums of money.

Much of the kit invested in will be obsolete quickly, however, since by spring they will no longer need as many trucks and workers.

Mr Bocque compares the situation to the Millennium Bug efforts where a large number of computer experts were needed during an intense period only and insists the CIT sector has learnt from the IT sector's experiences.

Group 4 Falck has solved the truck issue by keeping some trucks longer than it would have usually done and by acquiring new trucks earlier than it would have done had it not been for e-day.

And when it comes to its workers, there are staff shortages in other divisions of the group, so Mr Bocque said he expects many CIT workers to remain with the company.

Group 4's Swedish-based competitor Securitas, the world's largest security company, also sees e-day as a short-term opportunity.

"Long-term it will not impact the development of the business," according to chief executive Thomas Berglund.

At least, not directly.

Knock-on effect

The indirect impact on the CIT sector is immense, however, since it will accelerate a trend seen by Securitas, where ever more banks outsource their cash handling.

Some security guards are concerned about a rise in crime

Modern security firms do more than just transport cash around, and the physical euro introduction accelerates this trend, Mr Bocque agreed.

"In Belgium, we will have more bank notes and more coins than we have with the Belgian franc," Mr Bocque said.

Similarly, in Italy the low value of one lira has all but eradicated coins in recent years as low denominations have become almost worthless.

Here, e-day will mean the reintroduction of coins, and this will pose new logistical problems for the banks.

Again, the CIT sector will benefit as the banks are expected to contract out cash handling procedures such as money transport, money counting and cash point maintenance, Mr Bocque predicted.

The sector even offers bank note bundling tools and coin rolls, he added.

Organic growth

Such new business opportunities offer so-called "organic growth opportunities" for the security firms, a stock market trader in Stockholm told BBC News Online.

Euro cash handling is a short-term businesss opportunity

This is good news since some of their traditional markets have shrunk as bank mergers have led to branch closures across Europe, he said.

Securitas already handles 40% of all the cash in the UK, and Mr Berglund predicted rapid growth in his company's cash handling business over the next few months as the outsourcing trend spreads in the wake of e-day.