Japan Post Privatized Today

Japan Post became the world's largest commercial bank today with 349.82 tillion yen ($3.03 trillion) in assets.

The move is expected to bring more competition to Japan's banking sector.

Japan Post has more than 400 million accounts. (Japan has only 120 million people.)

Japan Post also has 24,500 offices nationwide with sales agents for insurance and investment products.

Many rural Japanese only use Japan Post for their banking needs.

In the past, postal funds have been used to finance government-backed public works – bridges, road, bonds.

Foreign banks and investment companies are expected to be able to get new clients…and Japan's huge savings pool is now up for grabs at a time when Japanese are turning to stocks and mutual funds.

It will take ten years and Japan Post will be divided into four separate businesses initally under a government-controlled holding company:

1. an insurance company,

2. savings bank,

3. mail courier

4. post office management firm.

In 2017, the companies will become independent and listed on stock markets.

Uncertainties –

The playing field is still not level – Japan Post is too big

Foreign firms still do not have equal footing, save for Goldman Sachs Asset Management.

Japan Post does not have expertise in sophisticated investments and may not be profitable.

The concept of privatization = competition is good, more risk-taking behavior, a revitalized economy.

But, it can be pretty difficult, if not impossible to get a sumo-sized company to move quickly.

What do you think?