Not just for letters

In Japan, the post office isn’t just a place to mail letters. It’s also the country’s biggest bank by deposits, the largest insurer and the most common storefront. Generations of politicians used the system’s funds as a piggybank for pet projects. Now that’s changing as the government sold shares in Japan Post in a 1.4 trillion yen ($12 billion) three-pronged initial public offering in October, its biggest privatization since Nippon Telegraph & Telephone in 1987. It’s part of Prime Minister Shinzo Abe’s plan to drag the Japanese economy out of a two-decade slump with his make-or-break Abenomics policy. There’s been a decade of debate about how the sale of a national icon will jolt the nation’s banks, push an aging society’s savings into riskier assets and change the way rural citizens get access to their money.
apan Post has been broken into three separate companies – parent, banking unit and insurer – that began trading Nov. 4. The IPO put 11 percent of each company in private hands; further offerings will sell all of the bank and the insurer. Almost 80 percent of the share sale was aimed at individuals, part of Abe’s goal to convince more Japanese to invest in stocks. Households hold just 11 percent of their wealth in shares, less than half the percentage in the U.S.  All three businesses have obstacles clouding their growth prospects. The postal service, facing a decline in mail volume, has expanded abroad by acquiring companies such as Australian logistics provider Toll Holdings. At home, Japan Post must maintain universal services, which limits its ability to shutter unprofitable locations. The insurer is also looking overseas as the shrinking population crimps premium income. The banking arm is largely restricted from lending, so it’s focusing instead on boosting investment returns. The banking unit’s deposits, which carry an implicit government guarantee, are currently limited to 10 million yen ($84,000) per account. Privatization could clear the way for the cap to be lifted, increasing competition with more than 100 regional banks. Japan Post’s origins date back to 1871, when the mail service began during the Meiji period of modernization. A saving system introduced four years later quickly attracted deposits that helped fund government infrastructure spending as Japan became an economic powerhouse. Privatizing Japan Post was the brainchild of former Prime Minister Junichiro Koizumi, who said it fueled spending on wasteful projects and contributed to Japan’s swelling national debt. “I want to destroy a system that neglects 120 million citizens to protect a few hundred thousand bureaucrats,” he said in 2005.
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Not just for letters

In Japan, the post office isnt just a place to mail letters. Its also the countrys biggest bank by deposits, the largest insurer and the most common storefront. Generations of politicians used the systems funds as a piggybank for pet projects. Now thats changing as the government sold shares in Japan Post in a 1.4 trillion yen ($12 billion) three-pronged initial public offering in October, its biggest privatization since Nippon Telegraph Telephone in 1987. Its part of Prime Minister Shinzo Abes plan to drag the Japanese economy out of a two-decade slump with his make-or-break Abenomics policy. Theres been a decade of debate about how the sale of a national icon will jolt the nations banks, push an aging societys savings into riskier assets and change the way rural citizens get access to their money. apan Post has been broken into three separate companies parent, banking unit and insurer that began trading Nov. 4. The IPO put 11 percent of each company in private hands; further offerings will sell all of the bank and the insurer. Almost 80 percent of the share sale was aimed at individuals, part of Abes goal to convince more Japanese to invest in stocks. Households hold just 11 percent of their wealth in shares, less than half the percentage in the U.S. All three businesses have obstacles clouding their growth prospects. The postal service, facing a decline in mail volume, has expanded abroad by acquiring companies such as Australian logistics provider Toll Holdings. At home, Japan Post must maintain universal services, which limits its ability to shutter unprofitable locations. The insurer is also looking overseas as the shrinking population crimps premium income. The banking arm is largely restricted from lending, so its focusing instead on boosting investment returns. The banking units deposits, which carry an implicit government guarantee, are currently limited to 10 million yen ($84,000) per account. Privatization could clear the way for the cap to be lifted, increasing competition with more than 100 regional banks. Japan Posts origins date back to 1871, when the mail service began during the Meiji period of modernization. A saving system introduced four years later quickly attracted deposits that helped fund government infrastructure spending as Japan became an economic powerhouse. Privatizing Japan Post was the brainchild of former Prime Minister Junichiro Koizumi, who said it fueled spending on wasteful projects and contributed to Japans swelling national debt. I want to destroy a system that neglects 120 million citizens to protect a few hundred thousand bureaucrats, he said in 2005. Quick Take