Banks have been cleared by the ACCC to implement a collective “financial contributions” scheme that will keep Armaguard in business, at least for another year.
Months sometime high stakes negotiations between Armaguard and banks will give way to a period of sober scrutiny by the key clients for Armaguard’s wholesale cash distribution services of the firm’s reorganisation, following its takeover last year of its rival Prosegur.
The Australian Banking Association and Armaguard announced only two weeks ago that they’d reached agreement on a $50 million support package over 12 months for the cash-in-transit business. Two earlier funding packages were scuppered in recent months, either by banks or Armaguard.
The ACCC this week has now granted interim authorisation to this latest scheme.
The ACCC authorisation applies to “two or more of the ABA, the ‘Funding Parties’ (meaning, basically, the major banks), the Reserve Bank, Commonwealth Treasury and Armaguard to discuss, share information, reach agreement on and/or implement assistance measures by one or more of those parties for the purpose of supporting wholesale cash viability and access to cash by businesses and members of the public.”
Since late 2023, Armaguard has maintained its position that its business was “not viable in its current form”, with banks proposing a series of funding support schemes, before finally resolving the package announced in late June.
Armaguard must report to banks on “meeting milestones for implementing merger integration efficiencies” in its business plan, and also share information with an “advising accountant”, which is KPMG.
The ABA will need to report to the ACCC within seven days of a financial contribution being made to Armaguard.
The mooted “Independent Pricing Mechanism” outlined by the ABA two weeks ago, and would be relevant following the current 12 months support package “would be subject to a separate authorisation application” the ACCC said.
The ACCC said it “recognises the importance of maintaining access to cash in regional and remote areas.”
It emphasised “the ACCC’s clear expectation is that the ABA, the Funding Parties and Armaguard will commit to involving other users of cash-in-transit services in a meaningful way in respect of the development of operational sustainability and efficiency measures or an independent pricing mechanism.
“The ACCC expects those other affected parties would at a minimum include ABA members other than the Major Banks, non-ABA member commercial banks, mutual banks, credit unions and building societies, the Customer Owned Banking Association and its members and other major retailers present in regional and rural communities across Australia.”