The government agreed Tuesday to raise the cap on deposits at Japan Post Bank despite fears among small, regional rivals that it will result in an outflow of funds. Savers will be able to stash a total of ¥13 million in future, compared with ¥10 million as of now.
The Cabinet of Prime Minister Shinzo Abe approved the revision, which will also raise a limit on insurance at Japan Post Insurance Co. to ¥20 million from ¥13 million.
The changes, both effective April 1, are the first in 25 years for the bank and 30 years for the insurer.
The government owns most of the shares in Japan Post Holdings Co., the parent of the two firms, even after last year’s mammoth public offering by the three companies.
The businesses operate through the nation’s 24,000 post offices. The lifting of limits will help customers living in areas with limited access to banking.
The move comes as Abe’s Liberal Democratic Party gears up for an Upper House election this summer.
Internal Affairs and Communications Minister Sanae Takaichi, who oversees the nation’s postal services, told reporters after the Cabinet meeting she hopes the changes will lead to greater convenience for customers.
The focus is on how Japan Post Bank will cope with an expected increase in deposits.
The bank, which holds some ¥178 trillion in savings, has managed more than 40 percent of its assets in low-yielding Japanese government bonds. The recent slide in interest rates following the Bank of Japan’s negative rate policy is complicating its asset management.
Smaller regional banks have criticized the government’s move, saying they fear it will prompt their customers to defect at a time when their profit margins are already under pressure. Regulators have called for a realignment in the sector.
But some of the minor lenders are approaching the giant postal group for potential business tie-ups, including cooperation in selling financial products and the possible integration of their ATM systems.