Japan Post

In Japan, the post office isn’t just a place to mail letters. It’s also the country’s biggest holder of bank 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 privatizes Japan Post. Having completed a 1.4 trillion yen ($12.8 billion) three-pronged initial public offering in 2015, the Finance Ministry is now preparing to sell another stake. It’s part of Prime Minister Shinzo Abe’s plan to drag the economy out of a two-decade slump with his make-or-break Abenomics policy. There’s been more than 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.

Japan Post has been broken into three separate companies – parent, banking unit and insurer – that began trading in November 2015. The IPO put about 11 percent of each entity in private hands. The government still owns most of the holding company, which in turn is the majority shareholder in the two units. The Finance is planning to announce this month an additional share sale of Japan Post Holdings, which may raise a further 1.4 trillion yen, people familiar with the matter said. Almost 80 percent of the 2015 IPO was aimed at individuals, part of Abe’s goal to convince more Japanese to invest in stocks. Households hold under 10 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. Since the listing, some of the curbs on Japan Post’s business have begun to ease, increasing competition with the nation’s 100 or so regional banks. In March 2016, Abe’s cabinet raised a limit on the amount of deposits that the bank can accept to 13 million yen ($119,000) per account from 10 million yen. And in June, the Financial Services Agency gave approval for it to offer overdrafts.