Takenaka eyes postal loan business after privatization

The company that will take over the state-backed Japan Post’s postal savings operations in the nation’s postal reforms is expected to enter into the loan business, postal privatization minister Heizo Takenaka said Thursday.

But the government failed to elaborate on how the planned privatization of Japan Post will improve its operations during separate meetings later in the day with the ruling parties, lawmakers said.

The envisaged postal bank’s possible new services include loans to small businesses and housing loans, Takenaka told a House of Representatives Budget Committee session earlier Thursday.

It will be allowed to extend loans after it starts collecting money as a private business under the Banking Law, Takenaka said.

But the minister stopped short of indicating when the service might start, leaving the matter to the discretion of the bank’s management.

Meanwhile, the government told the ruling Liberal Democratic Party in a meeting that the performance of Japan Post would deteriorate if it remains a public corporation in presenting a document on its operations, the lawmakers said.

All of Japan Post’s three services are on the decline, as the volume of mail delivery and the outstanding balance of “kampo” life insurance peaked in 2001 and the balance of savings peaked in 1999, according to the document made available by the government.

Privatization will give the management the necessary flexibility to expand the scope of postal services to increase profits, while Japan Post is under tight legal controls in providing services as a public corporation, the government explained.

Remaining discontent with the government account, participants from the LDP reiterated their request for longer-term estimates comparing the expected effects of privatization and those of leaving Japan Post as it is, the lawmakers said.

The New Komeito party, the junior coalition member, heard the account separately after the LDP.

The government plans to split Japan Post into four business units that will each take over the public corporation’s three services and the management of the nationwide post office network in April 2007, at the start of a 10-year privatization process.

To realize the plan, the government aims to pass a set of bills during the ongoing Diet session that runs through June.