Internal Affairs and Communications Minister Kazuhiro Haraguchi revealed a plan Friday to reorganize the Japan Post group through a merger of group companies in a move seen as a step backward for postal privatization.
Streamlining the group structure would be centered on a merger between state-owned Japan Post Holdings Co., the holding company for the group, struggling mail and parcel delivery unit Japan Post Service Co. and post office operator Japan Post Network Co., according to Haraguchi.
The group’s banking and insurance units, Japan Post Bank Co. and Japan Post Insurance Co., would operate under the wing of the merged company as the plan envisions trimming the number of group firms from five to three.
Haraguchi and Shizuka Kamei, state minister for postal issues, will work out the details of the realignment before submitting relevant bills to the upcoming Diet session to be convened later this month.
“Combining Japan Post Holdings, post office operations and mail delivery services will enable the group to provide varied services as one unit, along with two financial services companies under its umbrella,” Haraguchi said.
The reorganization was prompted by worries that Japan Post Service may not stay afloat given the frail business environment surrounding its mail and parcel delivery services. Japan Post Bank and Japan Post Insurance generate the bulk of profits for the group.
The original plan called for Japan Post Holdings to sell all stakes in the two financial companies. Haraguchi declined to comment on the stakes the government-owned firm would hold in them after the planned merger.
The government led by the Democratic Party of Japan, launched in September, has been pushing for a review of the postal privatization reforms spearheaded by former Prime Minister Junichiro Koizumi of the Liberal Democratic Party.
Kamei, who also heads the DPJ’s coalition partner, Kokumin Shinto (People’s New Party), has been a staunch opponent of the privatization process Koizumi led and has been keen on reshaping the Japan Post group.