Japan Post's operations to be expanded after privatization

A new bank and insurance company, to be created through Japan’s postal privatization next year, will try to expand their operations to match those of their private-sector rivals, informed sources said Friday.

According to the outlines of their business plans, Yucho (postal savings) Bank and Kampo Life Insurance will eliminate or raise the 10 million yen ceiling per depositor and policyholder currently set for money to be put into postal savings and postal life insurance, the sources said.

The bank will also seek to extend loans to individuals in addition to small and midsize enterprises, and the insurance firm plans to start offering medical insurance products, the sources said.

Yucho’s and Kampo’s assets will total around 226 trillion yen and 114 trillion yen, respectively, surpassing those of the two leading companies in the industries — Mitsubishi UFJ Financial Group Inc. and Nippon Life Insurance Co., the sources said.

The Diet-passed legislation will split Japan Post, the state-run postal service entity, into four stock firms — savings, insurance, mail and over-the-counter services — on Oct. 1, 2007, under a holding company.

Japan Post Corp., which will be turned into the holding firm, will submit the business plans to Internal Affairs and Communications Minister Heizo Takenaka next Monday.

The banking and insurance industries are likely to criticize the plans and say that the two companies’ envisioned business models pose major threats to private sector corporations.

The Japan Post group companies will have a total of 253,200 employees, the outlines said.

Japan Post will draw up its business plans in detail by the end of April 2007 based on the outlines.