Westpac is selling a large chunk of its ATM fleet under a deal about to be struck with the Australian arm of global cash solutions giant, Prosegur.
The bank plans to offload at least 750 automatic tellers for around A$25 million following a formal call for bids from interested buyers earlier this year.
While it is not clear how many parties pitched offers, it is understood that Armaguard and Texas-based NCR Corporation were among the unsuccessful bidders on the bank's shortlist.
Banking Day yesterday learned from several banking industry sources that the ATMs earmarked for sale are "offsite" machines not located alongside or within Westpac branches.
This raises the prospect that Prosegur's real acquisition price is much higher than $25 million depending on whether Westpac has prepaid for site leases.
A Westpac spokesman refused to comment on the transaction.
"We don't comment on market speculation," the spokesman said.
The deal is a significant development because it positions Prosegur as a candidate to manage a pooled ATM utility that three of the major banks - ANZ, NAB and Westpac - have been negotiating for several years.
Prosegur currently owns several hundred ATMs in Australia as part of its provision of integrated cash management services to entertainment and gambling venues.
Its client base includes RSL clubs and a prominent casino in Western Australia. It also has mandates from local banks to service and maintain approximately 5000 automatic tellers.
Prosegur is a Spanish company that acquired the Australian arm of cash logistics company, Chubb Security, in 2013.
Cash logistics and ATM maintenance companies are refashioning their business models so they can tender for management contracts when the major banks eventually launch a pooled ATM network.
In February, the Lindsay Fox-owned Armaguard - one of Prosegur's main competitors in Australia - signalled its strategic intentions to play a role in pooled bank ATM service when it acquired Cuscal's loss-making RediTeller fleet.
The acquisition gave Armaguard proprietary control over 700 machines.
Armaguard currently services another 12,000 automatic tellers owned by financial institutions.
The abolition of ATM interchange fees in 2017 has transformed the economics of operating large ATM fleets for most banks and has resulted in many owners writing down the carrying value of such assets in the last two years.
Some financial institutions have marked down their valuations of ATM fleets to zero and withdrawn thousands of machines from service.
Westpac chief executive Brian Hartzer revealed at the 2018 full year profit announcement last November that the bank suffered a $67 million slide in fee income, most of which was attributable to the removal of ATM fees.
Throughout 2018 Westpac implemented an aggressive ATM reduction program that resulted in the withdrawal of more than 400 machines.
The size of the bank's fleet has shrunk from 3850 machines in 2016 to 3,222 at the end of September last year.
When the sale transaction is completed the number of machines in the proprietary fleet is likely to sink well under 2500 given that Westpac has continued to withdraw ATMs in 2019.
ANZ and NAB have also been culling their networks in the last two years.
Regional banks have probably been impacted most from the removal of ATM fees in the last two years and have slashed their fleets more aggressively than the majors.
Suncorp slashed the size of its fleet by 311 machines or 60 per cent in 2018.
Bendigo and Adelaide Bank has also cut deeply.
In its 2016 annual report Bendigo reported having 1540 automatic tellers across Australia, but the number had fallen to 632 at the end of June this year.