Japan’s government unveiled details of a plan to expand the financial-services offering of its postal service, a move that has sparked protests from Japan’s financial industry.
The plan, part of an effort by Japan’s new government to reverse the privatisation of Japan Post Holdings Co., follows weeks of government discord over how far to take the effort. The plan suggests the government is moving toward the preferred policy of Banking and Postal Services Minister Shizuka Kamei, a privatisation opponent who has pushed to give Japan Post greater competitive heft.
The move has drawn criticism from Japan’s financial industry, amid concerns that a government-backed financial giant could distort competition and present a big risk to the stability of the market.
Under the plan, Japan Post Holdings will continue to control its two financial units, Japan Post Bank and Japan Post Insurance. It will absorb two other units, Japan Post Network Co. and Japan Post Services Co., on Oct. 1, 2011.
The deposit ceiling on postal savings also will be doubled to 20 m yen (about $216,000) per customer, and the 13 m yen upper limit on life-insurance payments will be boosted to 25 m yen.
The Democratic Party of Japan-led government said the proposal will allow Japan Post to offer “universal service across the country.”
The government aims to finalize its decision at a cabinet meeting on April 27 and to sent it to the current legislative session for approval.
Mr. Kamei, who leads a small party that is part of the DPJ-led ruling coalition, proposed sharp increases in the savings and insurance limits last month.
That point, and other measures, drew criticism from the private sector, as commercial banks and life-insurance companies said the growth of Japan Post will distort fair competition.
The plan raises the question of what the government-backed financial giant will do with its vast holdings. According to the proposal, Japan Post will no longer be required to file for regulatory approval from authorities such as Ministry of International Affairs and Communications when starting new financial businesses. The group will need to only notify them.
Japan Post holds assets valued at about $3.3 trillion, making it one of the world’s largest financial institutions. Mr. Hatoyama’s government last year froze the sale of equity in Japan Post’s banking and insurance arms, a process that was slated to begin this year.
Source: Japan Post
Tags: Financial Services, Japan Post, Postbank
