Tag: Japan

Japan Post will start hiring workers dispatched from employment agencies at its post offices to cover labor shortages to be caused by mass retirement at the end of this month, Jiji Press learned Saturday.

Specifically, Japan Post will hire some 20 dispatched workers at 20 post offices in Kanagawa, Osaka and Hyogo Prefectures in April, informed sources said. The workers will be in charge of postal savings services.

Post offices currently employ part-time workers, but not dispatched workers, because labor costs for dispatched workers are generally higher than those for part-timers.

Japan Post will see 12,400 full-time workers, or some 5 pct of the total, retire on March 31, while only 6,400 workers will be added in April. As of April 1, Japan Post will be short of about 10,000 workers, four times the level of labor shortages a year before.

The state-owned Japan Post will be split up into four firms, including a “Yucho” bank and a “Kampo” insurance firm, under a 10-year privatization process that begins on Oct. 1. A network of post offices across Japan will be managed by one of the four companies to be created through the breakup.

Japan Post said on Tuesday it was planning to offer mortgages, credit cards and small business loans following its privatisation in October this year, in a move that would introduce a massive competitor to private Japanese banks in areas they consider vital to their growth.
The post office is currently restricted to taking deposits and making limited loans. But its total deposits of Y189,314bn (USD1,616bn, EUR1,215bn, GBP832bn) mean that it will become the world’s largest bank by assets once privatised, overtaking Japan’s Mitsubishi UFJ, which has deposits of Y115,600bn.

Japan Post’s future ambitions depend on which sectors it will be allowed to enter by the ministry of internal affairs and communications and a government committee entrusted with postal privatisation.

The plans to enter personal finance businesses comes as Japan Post has suffered a slow but steady decline in depositors in the country’s persistently low interest rate environment. Its deposits topped Y200,000bn as recently as last year.

Offering mortgages would be an efficient way for Japan Post to build up its banking operations, as borrowers tend to use their mortgage provider as their main bank.

Although mortgage interest rates are low, at about 3 per cent for a 35-year fixed-rate loan, they are good quality credit as default rates remain very low in Japan, says one banker.

Personal loans and small business loans, which offer banks higher interest, are also considered promising growth areas for banks.

What business Japan Post enters after privatisation is a sensitive topic as many banks are wary of the impact that entry by the world’s largest bank could have on already fiercely competitive markets.

Japanese banks are keen to expand fee and income businesses, as their traditional corporate lending business is expected to remain sluggish.

Japan Post is already a large seller of investment trusts, which is another business banks are keen to expand as the retirement of baby-boomers is boosting demand for investment products. Last year, net sales of investment trusts by post offices reached Y561.6bn.

Japan Post, the world’s biggest financial institution and the traditional safe haven for the country’s millions of highly conservative savers, has outlined ambitious plans to double sales of higher-risk investment trusts.
The company’s announcement highlights the key role it plays in changing households from savers – who put their money in conventional bank or post office accounts, where it earns a tiny rate of interest – to fully fledged investors, who put money into securities to win a higher return.
As Japan Post customers shift more of their money from post office accounts and into investment trusts, they are also likely to contribute to the continuing large flow of money out of the yen and into other currencies.
This is because many investment trusts put money into foreign as well as Japanese assets. This large outflow has been a big driver in pushing down the yen in recent years, enabling the carry trade to prosper.
The Expansion of Japan Post’s investment trust business ties in with the reformist political legacy of Junichiro Koizumi, Japanese prime minister until last year.
Mr Koizumi was determined to reduce the share of the economy controlled by the public sector.
The launch of the investment trusts has the same purpose as the planned privatisation of Japan Post, which is due in October.
Both will switch assets away from the inefficient public sector to the wealth-generating private sector.
This is because money resting in Japan Post’s conventional savings products is primarily used to buy bonds issued by the Japanese government and its various agencies.
By boosting sales of investment trusts and pocketing the fees from selling them, Japan Post hopes to increase profitability at a time when it wants to establish viable financial independence ahead of privatisation.
The company plans to double its sales target of investment trusts to Y1,100bn (USD9.3bn) in the year to March 2008, after reaching its annual 2006-7 target of Y540bn a month early in February, a spokesman told the Financial Times.
Japan Post will also increase the number of post offices selling investment trusts by about 400 to 1,155, although this is still a fraction of the more than 20,000 branches in its network.
From June, the company will add two more investment trusts to its current line-up of nine, said the spokesman. One will con-centrate on high-dividend shares, and the other will change its asset mix as the investor ages.
Japan Post launched investment trusts in October 2005, with offerings from Nomura, Daiwa and Goldman Sachs that inves-ted in bonds, equities and property.