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Japan Post Holdings Inc.’s two financial units could unilaterally stop consigning work to its mail service unit in 2017, dealing a blow to post offices nationwide, sources said Thursday.

Although the two financial companies — Japan Post Bank Co. and Japan Post Insurance Co. — have their own outlets, they use some 24,000 post offices run by the mailing service, Japan Post Network Co., to operate their banking and insurance businesses.

Service charges from Japan Post Bank and Japan Post Insurance account for a large part of the revenues of regional post offices.

According to their contract clauses, Japan Post Bank and Japan Post Insurance have entrusted Japan Post Network to offer their services for 10 years from October 2007, when the postal privatization process began.

But in 2017 or later, the two financial companies will be able to cancel the contracts anytime they chose, providing they hold a six-month consultation.

Japan Post has said the contracts between the financial firms and post offices should be maintained for the long term.

But if Japan Post ends a capital relationship with Japan Post Bank and Japan Post Insurance, as obliged by law, the two firms may cancel the contracts with post offices regardless of Japan Post’s wishes.

Once fully privatized, business efficiency concerns may lead to the two financial units to not extend contracts with post offices beyond 2017, some lawmakers have warned.

The issue could also affect political debate on reviewing the 10-year privatization process of the postal system, a symbol of the structural reforms of former Prime Minister Junichiro Koizumi.

Japan Post, currently 100 percent owned by the government, plans to list itself, as well as the two financial units, in fiscal 2010 at the earliest. It intends to fully privatize the two companies by selling all its shareholdings in them by September 2017.

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