Armaguard was excluded from a meeting at the Reserve Bank on Wednesday, where the major banks and financial regulators discussed plans to replace a crucial cash distribution arrangement involving Westpac that expires within months.

Under a 20-year agreement overseen by the RBA, Westpac technically owns the hundreds of millions of dollars stored in Armaguard vaults before that cash is transported to bank branches and retailers. This has created a risk for Westpac, along with compliance costs, that it no longer wants to bear on its own.