Japan Post actively joining hands with private-sector firms

Japan Post Corp., a planning company for the breakup and privatization of state-owned Japan Post, has been scrambling to team up with private financial service firms to ensure smooth launches of new products.

The partnership efforts may also be aimed at dodging criticism that a privatized group could crowd out private-sector businesses, sources close to the matter said.

Japan Post will be broken into a “Yucho” postal savings bank, a “Kampo” insurance firm, a mail delivery firm and a post office network management company in October as the first step of a 10-year privatization process. Japan Post Corp., as a government-controlled holding company, will own those firms.

In the run-up to the breakup, the planning firm last month asked life insurance companies to provide variable annuity products for sale through Yucho bank offices, starting as early as May 2008.

Variable annuities will be a key addition to the menu of financial products at the Yucho bank to complement postal savings and investment trust funds Japan Post now offers as mainstay fund management vehicles for individuals.

The planning company also eyes tie-ups with JCB Co. and Sumitomo Mitsui Card Co. for the planned launch of Yucho bank-brand credit cards. It is also considering having the bank offer housing loan products of partner companies in a bid to accumulate knowhow in the business field, Japan Post Corp. officials say.

The post office network management company, which will take over 24,000 post offices nationwide, will seek to expand earnings through the sale of auto insurance products, initially at 23 post offices in the Tokyo metropolitan area at the October launch of the firm. Seven nonlife insurers are already set to provide their products to the firm.

The Kampo insurance firm will sell level premium insurance products targeting small and midsize firms, offered by other insurance firms, as a mainstay corporate business at its 81 directly operated branches. For individual clients, Japan Post Corp. is also considering having the new insurer develop and provide third-sector products such as medical insurance, possibly in partnership with other life insurers.

The series of tie-ups has been received with mixed feelings by the private sector.

A life insurance industry source said the moves are welcome because they help expand sales channels, while a banking sector source expressed caution that they may be part of a strategy to contain criticism about crowding out private-sector firms.