Japan Post business plan to create giants

The Japan Post group, to be born via privatization in October, will consist of five companies that will dwarf or equal private-sector rivals, according to a business plan submitted to the government.

The plan, sent for approval Friday to internal affairs minister Yoshihide Suga by Japan Post Corp., a privatization preparatory firm, expects the Japan Post group’s net profit to hit 587 billion yen in fiscal 2011, exceeding the 500 million yen of the NTT group–one of Japan’s largest corporate entities.

The group’s five companies will have a total 241,400 employees, compared with NTT’s 200,000.

The Japan Post group will consist of a holding company and four operating firms, each of which will be in charge of mail delivery, post office management, postal savings and postal life insurance.

The four operating companies will exceed, or at least equal, the biggest players in the private sector in their respective fields.

The postal savings bank, for example, is expected to manage 164 trillion yen in deposits in fiscal 2011. The balance will nearly equal the combined deposits at two of the nation’s three largest financial groups–Mitsubishi UFJ, with 100 trillion yen, and Mizuho, with 70 trillion yen.

The postal bank will be the Japan Post group’s key money maker, projecting 304 billion yen in net profits in fiscal 2011.

Still, the amount will represent a slight decline from the 321 billion yen forecast for fiscal 2008, due to an expected rise in interest rates and an anticipated fall in deposits from the current 190 trillion yen.

To stem the decline in profits, the postal bank plans to offer new businesses, such as housing loans and credit cards as early as next year, a move that is likely to heat up competition with private-sector rivals.

The postal life insurer’s total assets will also drop from the current 120 trillion yen to 91 trillion yen in fiscal 2011. But that figure will still be nearly double the 50 trillion yen of Nippon Life Insurance Co., the nation’s largest life insurer.

The postal life insurer plans to boost profits from its fund management amid rising interest rates.

By contrast, the mail delivery company and the post office management company, which have more than 100,000 employees each, expect modest profits.

The mail delivery company plans to enter the direct mail service sector, which is the turf of private home delivery companies.

To attract customers to its outlets, the post office management company will sell life and nonlife insurance products offered by private insurers