Japan draws up plans for world's largest bank

Yucho Bank doesn’t exist yet, but by next year it could be the world’s biggest, with nearly USD2 trillion in assets.

According to a 10-year road-map for the privatization of Japan Post Corp., formerly known as the Postal Services Agency, the bank will have 233 branches in Japan and also operate through the nation’s 24,000 post offices. Currently, Japan Post hold a third of the country’s personal savings.

Yucho Bank doesn’t exist yet, but by next year it could be the world’s biggest, with nearly USD2 trillion in assets.

On Monday, Japan Post president Yoshifumi Nishikawa handed the plan to Heizo Takenaka, Minister of Internal Affairs and Communications.

The plan is expected to be approved this month by a Cabinet panel, according to reports.

Japanese Prime Minister Junichiro Koizumi, who is due to step down in September, has long promised to privatize the postal service. The issue has been a keystone of his political platform since he came to power in April 2001.

Yucho Bank’s services will include consumer financing and the sales of bonds and investment trusts, according to the plan. The bank will also raise or eliminate the current 10-million-yen limit on individual deposits, and offer credit card services.

The long-anticipated road map calls for the postal service to be broken up into four separate companies.

Besides the bank, tentatively called Yucho (which means “postal savings”), the companies will be responsible for insurance, mail delivery and post-office management.

The new insurance company would be called Kampo Life Insurance and have assets of about USD1 trillion, making it Japan’s largest insurer.

Yucho Bank and Kampo Life would be created in 2007, according to the plan. They would be listed on the Tokyo Stock Exchange by 2011, and all their shares would be sold to private investors in the course of the following five years.