Japan today announced ambitious plans to sell off shares in Japan Post, which is one of thecountry’s largest financial institutions, to raise up to US$87 billion to fund recovery measures
linked to the Fukushima earthquake, tsunami and nuclear disaster in March 2011.The controversial privatisation, slated for 2015, would be one of the largest in Japan in thelast two decades but could face opposition from the financial sector and politicians, according tointernational media reports.
Postal privatisation has long been on the political agenda in Japan but has been repeatedly heldup by political disputes and changes of government. Former premier Junichiro Koizumi planned toprivatise the postal group by 2017 but this deadline was killed off earlier this year by the DPJparty, which had taken over government from Koizumi’s LDP party in 2009. Instead, the DPJ passed alaw ensuring the state would retain one third of the company in any privatisation.
Japanese finance minister Koriki Jojima told a press conference that the government would sellshares in the Japan Post holding company in stages and hoped for as high a price as possible. The Nikkei business newspaper reported that the government could earn 7 trillion yen (US$87billion) by selling two-thirds of the company.
Japan Post is unusual among the world’s postal operators because its financial services businessis far bigger and more important to the economy than the core postal activities. According toReuters, Japan Post’s banking division holds savings worth about 20% of the country’s total cashand savings, while its insurance division is a major holder of government bonds, thus keepinginterest rates low despite the country’s massive debts.
The group is divided into three business divisions, JP Post, JP Bank and JP Life. JP Post, withmore than 200,000 employees, covers both the post office network and the delivery services.
In financial terms, Japan Post is highly profitable, with large-scale banking profits more thancompensating for the loss-making postal services. In the year ending March 2011, the group had netprofits of 419 billion yen and operating profits of 957 billion yen. JP Bank had operating profitsof 526 billion yen and JP Life made 422 billion yen.
In contrast, Japan Post Service had an operating loss of 89 billion yen while the Japan PostNetwork had a profit of 58 billion. These two postal divisions were merged into ‘JP Post’ earlierthis year. JP Post is suffering from declining mail volumes but is expanding its Yu-Packparcel activities in response.
