Proposed Japanese postal savings bank to form branches in all prefectures

The government is considering having the envisioned postal savings bank set up a main branch in every prefecture in Japan, government sources told Kyodo News on Sunday.

The 47 core branches would be in charge of supervising loan application examinations at all local post offices following the planned privatisation of Japan Post, the sources said.

The postal savings bank is one of four units to be placed under a holding company when Japan Post is split up in April 2007 initiating a 10-year transitional period for privatisation.

The four units will respectively take charge of mail services, postal savings, postal life insurance and over-the-counter services. The over-the-counter services unit will take over the operation of the 24,700 post offices across the nation.

The sources said the banking unit will use the main prefectural branches to oversee mortgages and syndicated and other types of loan services to be offered at post offices.

In addition, the postal bank’s prefectural branches would be responsible for educating employees of the over-the-counter unit on ways to handle financial instruments to be offered by the bank.

On Wednesday the Cabinet approved a package of six bills to privatise Japan Post over the transitional period through 2017 with the government retaining at least a one-third stake in the holding company.

The package and the government’s agreements with senior Liberal Democratic Party officials effectively oblige the postal bank to conclude agent contracts with each of the 24,700 post offices to be taken over by the over-the-counter services unit.

As a result of the privatisation, the over-the-counter services unit will take charge of a wide range of new duties from mail handling to postal insurance to commodity sales, on top of the duties it will assume from the postal bank.

In the light of the plan to task the unit with such a wide scope of duties, the government determined that it would be difficult for the employees at the over-the-counter services unit to additionally deal with the examination of loan applications as it requires high-level banking-related knowledge, they said.

More specifically, the postal bank will rent a part of the premises at existing central post offices in all prefectures, making its 47 core branches tenants at these existing prefectural central post offices.

Then, employees of the postal bank, who are now commissioned to work from the prefectural central post offices, will provide guidance and supervision to employees at local post offices, they said.

Although the scope of the envisioned lending operations of the postal bank will be limited during the period immediately following the privatisation, such limits are expected to be softened in stages after the degree of private equity ownership of the postal bank is heightened, they said.

Under the proposed legislative package, the holding company will be allowed to hold a certain degree of stake in the postal bank during the transitional period.