Bid to reshape Japan Post Group into four company units

The Japan Post Group could be restructured from five companies into four, with the mail delivery subsidiary Japan Post Service merged with the postal retail subsidiary Japan Post Network, under a new cross-party political agreement. The move would reportedly see the abandoning of previous government proposals to turn the Group into a three-company structure prior to privatisation, part of a postal reform bill that has been stuck in political limbo for the past two years.

Details emerged yesterday of high-level talks between the main political parties in Japan on Friday regarding how to stem the poor performance at the national postal service.

The new restructuring model would see a merged Japan Post Service and Japan Post Network operating alongside separate Japan Post Insurance and Japan Post Bank companies, with all three under the control of Japan Post Holdings.

The previous three-company proposal had been for Japan Post Service and Japan Post Network to merge with Japan Post Holdings, which would control the insurance and banking companies.

Unnamed sources told the Japanese national newspaper Yomiuri Shimbun this week that agreement between the Democratic Party of Japan, the Liberal Democratic Party and New Komeito could pave the way for a fresh attempt to privatise Japan Post.

To do so, a ban on the sale of government-held Japan Post shares would need to be lifted. However, the newspaper said the meeting of the parties had fallen short of agreeing whether to sell off government shares in the Group’s insurance and banking subsidiaries.

The opposition Liberal Democratic Party favours the sale of all shares of the Japan Post Bank and Japan Post Insurance, while the other, governing parties would like the government to retain more than a 33% share in the companies.

Business lobbies from the banking and insurance sectors are urging a complete privatisation of the Post Bank and Post Insurance companies, concerned at the advantages the businesses have with government backing.

Losses

Japan Post Group has a network of around 24,529 post offices across the country, including 20,233 of its own branches and 4,296 contracted post offices, along with 1,110 delivery service branches and 2,536 collection and delivery centres, delivering around 64m pieces of mail each day to about 31m homes and businesses.

The company has spent much of the last year recovering after the March 2011 earthquake, but even before the disaster has found its growth in revenue “significantly outpaced” by an increase in staff costs and in collection, delivery and transport costs, along with an ongoing 3% annual decline in mail volumes.

In the year up to March 2011, the mail delivery company Japan Post Service registered a net operating loss of 103.4bn yen, delivering 19.8bn postal items through the year, 340m parcels through its Yu-Pack service and 2.6bn pieces of advertising mail through its Yu-Mail service.

Selling off government shares in Japan Post Group could potentially bring in 6 trillion yen to help with recovery efforts from the 2011 earthquake and tsunami.

• Japan Post Group last month lost a lawsuit over the name of its Yu-Mail service, with a Tokyo district court deciding it was too similar to a Yu-Mail trademark registered by a catalogue company in Sapporo in 2004. Japan Post Group is planning to appeal the ruling.