Japan Post Privatisation To Create World’s Largest Bank

By Stewart Douglas

The Japanese postal system has today begun its initial privatisation, as part of a decade long plan that will see the state run service become the largest commercial bank in the world.

The Japanese postal service Japan Post will begin its fragmentation today amongst the private sector organisations that have won contracts for the initial term, and will see the organisation split into four distinct branches to reflect the diverse extent of its operation.

The proposed move will take in all a decade to complete, provided the transition moves according to schedule, and is designed to generate significant public revenue as well as improving service provision through increased competition within the private finance and courier sectors.

The move will split the operation into banking, insurance, deliveries and post office divisions, which will in the process create the world’s largest commercial bank with over 400 million accounts and $3 trillion in assets.

The privatisation was welcomed by the stock market upon its announcement in 2005, which saw analysts invest on the anticipation of the shift to the private sector.  It is expected that both the banking and insurance operations will be traded on the Nikkei within the next five years.

Whilst designed to increase the level of competition in the Japanese banking sector, the move is also likely to create more jobs and fuel economic growth, as a result of introducing more capital into business markets to fuel corporate expansion projects.

Additionally the privatisation may help to ease the current credit crunch environment by enabling a fresh cash injection into the finance sector, taking much of the pressure of current lenders suffering from liquidity problems.

Lenders across the globe have noticed a squeeze on liquidity as a result of higher inter-banking lending rates and increase mortgage defaults in the US sub-prime sector.