Bankers’ report calls for end to postal savings system

The nation’s banking community drew up a report Mar. 25 calling for the privatization and subsequent breakup of the government’s postal savings system, saying it was a barrier to full implementation of financial deregulation.

The Japan Federation of Bankers’ Associations — long a critic of the postal savings system, which it claims is sucking up private sector business — called for postal deposits to be separated from the other two postal businesses of mail and postal life insurance. The report said postal savings had ballooned into a system with over 30 percent of individual deposits and savings and had overgrown its initial role of providing accounts for small deposits. “We believe that postal savings as a government operation is virtually unnecessary” and that its privatization better serves the public interest, federation Chairman Shunsaku Hashimoto told a news conference.

The private sector maintains that with its improved risk management and increased network of automatic teller machines and branches, the need for a nationwide postal savings system has greatly diminished. Upon privatization, the system should be broken up into regional units so that there would be fair competition with the private banks, the report said.

The system, being a public operation, enjoys such treatment as not being charged corporate taxes or deposit insurance premiums, and does not disclose information on management to the same level as private financial institutions, according to the banking industry.