Japan Post Holdings Co. is planning a massive investment to refurbish and reorganize its outlets and operations in its three-year management plan from fiscal 2014.
The company, however, has not been able to map out plans for entering the potentially lucrative markets for housing loans and lending to corporate borrowers because of its status as a government-owned entity.
The three-year program also lacks specifics about the holding company’s approach to an initial public offering, which is to be the culmination of the whole enterprise of bringing the nationwide mail, banking and insurance operations under private ownership.
At a news conference Wednesday to reveal the midterm program, President and CEO Taizo Nishimuro said, “We’ve shown what we can do within the restrictions that we face right now.”
The remark by Nishimuro, a seasoned executive who once ran electronics maker Toshiba Corp. as president and chairman, points to the frustration felt at being shackled in the field of money-making financial services at a time when profits are being squeezed in the postal service division.
Under the program, the group is planning to invest a massive ¥1.3 trillion over the three years from this April to renovate aging post offices, overhauling mail delivery and other systems and undertaking real estate development.
The post office network will be reorganized chiefly in urban areas. Around 10 outlets will open per year, while 20 to 25 offices will be closed or merged.
The group is keen on expanding its operations in order to maintain its nationwide network of 24,000 post offices. A broad range of financial products to lift its bottom line is needed to keep its ubiquitous presence across the country, including in sparsely populated remote villages and communities.
The program does include one financial product, the April inauguration of a school fund insurance policy by Japan Post Insurance Co., but not the mortgage or business loans Japan Post Bank is craving.
The Japan Post group requires government authorization for new businesses and products. If the insurance and banking units go public, they would only need to report new operations to the authorities, giving them freedom in management.
The holding firm is exploring the possibility of a joint initial public offering of itself and the two financial units, but the Finance Ministry — the owner of the state’s interest in the holding company — is apparently not thrilled by the idea because that could dilute investor interest and result in reduced proceeds.
Nishimuro said he “would like to finalize (the listing date and other points) in June or July” but if talks with the state hit a snag, the IPO plan could be delayed further than the group’s spring 2015 target schedule.