Japan Post: Postal reforms to start in earnest
Japan Post will be split into four business entities–Japan Post Network, Japan Post Service, Japan Post Bank and Japan Post Insurance–under a holding company called Japan Post Holdings Co.
Japan Post Bank and Japan Post Insurance will aim to list their stocks on the market in about three years, and all of their shares held by the government will be sold within 10 years to fully privatize themselves.
The holding company will also aim to list its shares, but the government will keep a more than one-third stake in it.
The massive amount of funds flowing into postal savings and insurance have long been used for the purchase of government bonds and for loans to public corporations. The primary purpose of postal privatization is to change the nature of postal savings and insurance from one of public financing, so the private sector can utilize funds deposited by people effectively.
Japan Post Bank holds 222 trillion yen in total assets, while Japan Post Insurance has 112 trillion yen. They will become the nation's biggest bank and life insurance Company, respectively.
Japan Post Bank plans to enter the housing loan and consumer credit card businesses, with an eye to providing loans to corporations, among other business goals. Japan Post Insurance aims to enter the medical insurance and other markets.
Japan Post Bank wants to abolish ceilings on deposits while Japan Post Insurance hopes to raise the ceilings on the insurance benefits.
They will have to seek out new, profitable revenue sources before they can list their shares as private companies. Such diversification of investment vehicles, including the provision of loans, will be consistent with the goal of the postal reforms: diverting the funds of Japan Post Bank and Japan Post Insurance to the private sector.
The diversification of fund investment requires know-how in a wide range of fields, including financial skills necessary for risk management.
Given the massive amount of funds the two Japan Post financial institutions hold, any move by them to expand their businesses while the government holds their shares is certain to be criticized as muscling in on the business of private financial institutions.
Whether their businesses will unfairly encroach on the business turf of private financial institutions will be a crucial yardstick when the government committee on postal privatization screens prospective businesses of Japan Post Bank and Japan Post Insurance.
It is hoped that the committee will make decisions by examining the balance between the amount of funds they hold and their investment abilities, while also looking into how much shares in the possession of the government will have been sold by the time the businesses are launched.
Services must be maintained
Another thorny issue is how to maintain the network of post offices spread across the nation as well as the postal delivery business–a service essential for people's everyday lives.
The profitability of the postal delivery service is lower than that of private delivery firms. Streamlining the postal businesses is necessary, but there is persistent concern among rural residents about the possible closure or mergers of post offices in their areas. The new postal entities must maintain the current services and then examine if it is possible to further improve them.
There have been many cases of crimes involving postal workers, such as thefts of mail and deposits. And it has been revealed that 14 million pieces of transaction data were mistakenly discarded in violation of in-house rules. Another challenge for the privatized postal companies will be making sure their employees comply with the law.
