The ACCC took one day last week to formally confer interim authorisation on the industry’s latest application to engage in broad-based talks around the sustainability of cash distribution in Australia, and above all business continuity planning.
The Australian Banking Association lodged its application on Wednesday, pleading with the ACCC for a green light by no later than the end of the week.
High stakes negotiations around the industry and between the industry and Linfox Armaguard reached a crescendo on Wednesday, culminating in a surprising change of heart by Armaguard and its owner Linfox, which (for the time being at least) will continue to support the trading position of its cash-in-transit subsidiary.
As was widely reported on Thursday afternoon, Armaguard ended up spurning a revised short term support package of $26 million over six months brokered by the ABA.
Mick Cronin, CEO of Armaguard said in a statement on Thursday that “Armaguard confirms it is working constructively with all its customers, including its retail customers, banks and other key stakeholders regarding both short term and long term financial solutions for the industry to remain sustainable.
“Armaguard continues to operate its full suite of services and is confident that over the coming months, it will get the business onto a long term sustainable footing with appropriate support from the industry.”
What that “appropriate support” might look like will be the subject of much more heated debate.
Three weeks ago, it seemed the banks and retailers and Armaguard were on the cusp of finalising terms for a three-year support package valued at in excess of $100 million.
Then a couple of weeks ago, views among the big banks fractured, leading to a shift in position, resulting in a much less material offer tailored as short term support.
Underneath all these fraught talks was the genuine fear on the part of banks and retailers that Armaguard might very well follow through on threats to place the business in administration as soon as tomorrow.
Early last week Banking Day was hearing that this threat was not merely credible but the probable outcome.
Coles, which was close to these talks, took this threat so seriously that on Wednesday last week the company suspended all cash collection and delivery arrangements with Armaguard for one week. In turn Coles advised all supermarket and Liquorland managers to halve the maximum cash out at point of sale to $200, and to prepare to switch to ‘card only’ payments if cash ran low.
Talk around the industry is that the banks (meaning, mainly, the big banks) are fed up with the Linfox approach to negotiations, which is feeding exaggerated mass media claims of an imminent cash shortage.
From today, the ABA’s negotiations with Armaguard will be handled in part by NAB’s new CEO Andrew Irvine, who also replaces his predecessor Ross McEwan as ABA chair.
Armaguard will need to be transparent and open its books to scrutiny, as the ABA and its key members and the RBA have long insisted - or there may be no more offers of financial support forthcoming from banks.
The ACCC interim authorisation allows the authorised parties to discuss, share information, reach agreement on and/or implement (as required) business continuity measures in the event of, or in reasonable anticipation of, a suspension, disruption or exit of Armaguard's cash-in-transit services.
The Reserve Bank of Australia has been overseeing the most critical discussions via its Cash Sustainability Working Group.
This working group, the ABA application to the ACCC relates, “has worked intensively over the last 15 weeks on a coordinated response.”