Retailers and banks are preparing contingency measures in case Armaguard collapses after the money transporter rejected a $26 million bailout from the nation’s biggest cash users.
The competition watchdog has approved an application led by the Australian Banking Association to allow a consortium of cash users to begin talks on measures in case of Armaguard’s failure.
The interim authorisation allows the groups to “discuss, share information, reach agreement on and/or implement business continuity measures” in the event of the “exit of Armaguard’s cash-in-transit services”.
Among those involved in the discussions include the Reserve Bank, Royal Australia Mint, Australia Post, key retailers, supermarkets, government departments, and Armaguard itself.
Armaguard previously rejected a $26 million deal from the Australian Banking Association, the big four banks, Woolworths, Coles and Australia Post despite being told the company was not financially viable.
Instead, its parent company Linfox, owned by billionaire Lindsay Fox, announced it would pump $10 million into the business as Armaguard works to find solutions to its financial woes.
While those discussions are permitted, the Australian Competition and Consumer Commission (ACCC) has imposed conditions including a monthly report on the discussions and any developments and decisions made.
In granting the interim authorisation, the ACCC said it considered the banking sector had a key role in addressing concerns about the ongoing sustainability of cash-in-transit services.
“The development and implementation of business continuity measures is likely to assist in minimising the impacts of any disruption to cash-in-transit services and access to cash, should the need arise,” the regulator said.
“The ACCC has been particularly cognisant of the importance of maintaining access to cash in regional and remote areas, many of which do not have access to cash banking services and rely on other means for accessing cash.”
Armaguard Group chief executive Mick Cronin said the company was continuing to work constructively with its customers including retail, banking and other key stakeholders regarding both short-term and long-term financial solutions for the industry to remain sustainable.
Concerns over the company’s future prompted Coles to stop cash deliveries to its stores until April 5, but the supermarket later reversed the decision.
It also reduced the amount of cash customers may withdraw in shops from $400 to $200, but there are no plans to unwind the change.
This article was first published by AAP.
William Ton is a reporter at Australian Associated Press.
