Japan Post plans service expansion after privatization
Japan Post Corp. submitted to the government on Monday [31 July] outlines of its 10-year postal privatization road map that includes plans to have its postal savings bank provide loans to individuals and its postal life insurance firm offer health and casualty insurance policies.
The postal savings bank will have 232 outlets while the postal insurance company will operate 81 outlets, and both will offer their services also at the postal group's network of 24,000 post offices across the nation, the outlines show.
Japan Post plans service expansion after privatization
Japan Post will set up two preparation companies for the bank and the insurance company as early as August, it said.
The outlines show the group aims to expand the scope of its businesses to match that of its private competitors' operations when it becomes a mammoth private group with a workforce of some 253,200.
Under Prime Minister Junichiro Koizumi's deregulation initiative, Japan in April 2003 converted the Postal Services Agency into Japan Post, a public corporation that took over the three services of mail delivery, postal savings and "kampo" life insurance from the agency.
In January this year, the public corporation created Japan Post Corp., a stock company, in the build-up to the 10-year postal privatization process beginning on 1 October 2007.
The stock company is to become a holding company of four units that will take over the public corporations' businesses – mail delivery, postal savings, life insurance and over-the-counter services through the network of post offices.
Given the large size of the envisaged private postal service group, its expansionary policy has drawn criticism from some quarters who claim the policy contradicts the spirit of "putting in the hands of the private sector whatever can be done by the private sector" for the postal privatization.
"It is a big problem that Japan Post is seeking an expansion of its management freedom" before the establishment of a level playing field for competition with its private-sector rivals, said Nobuo Kuroyanagi, chairman of the Japanese Bankers Association. He is also president of the Bank of Tokyo-Mitsubishi UFJ.
Katsutoshi Saito, chairman of the Life Insurance Association of Japan and president of the Dai-ichi Mutual Life Co., echoed Kuroyanagi by saying, "(The plan) stirs some concern from the perspective of establishing fair competitive conditions and protecting policyholders."
The road map outlines, handed by Japan Post Corp. President Yoshifumi Nishikawa to Internal Affairs and Communication Minister Heizo Takenaka, are expected to be approved early next month by the government's panel on the matter consisting of all cabinet members and led by Koizumi.
Japan Post is expected to draw up an action plan based on the outline by the end of next April.
Speaking at a news conference after the submission of the plan, Takenaka said, "The scale of the group, including the total amount of funds, will be cut down in the future. It is not adopting an expansionary policy."
Meanwhile, Nishikawa said, "We have drawn up the outlines with an aim to dedicate ourselves in the development of a regional economy by exercising our creativity and efficiency as a private sector."
According to the outlines, the postal savings bank, tentatively named Yucho (postal savings) Bank, will eliminate or raise the 10m yen [87,376 US dollars] ceiling per depositor, and will enter into the businesses of extending loans to individuals and offering credit card services "as early as possible after privatization."
The postal insurance firm, tentatively called Kampo Life Insurance, will raise the current 10m yen ceiling per policyholder and will enter into the non-life insurance field.
The holding company will list shares of the postal savings bank and the insurance firm four years after the privatization, then will sell all of their shares in another five years to private investors.
The over-the-counter services unit will aim to form tie-ups with insurance companies, other than Kampo Life Insurance, to handle their insurance products as well.
The mail service firm will strengthen the international distribution business.
Source: Kyodo News Service, Tokyo, in English 1523 gmt 31 Jul 06
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