The limit on savings at Japan Post Bank will be doubled to ¥26 million per depositor in exchange for a promise to make efforts to reduce the government’s equity ownership of the bank, sources have said.
After the increase, Japan Post Bank customers will be allowed to deposit up to ¥13 million, excluding interest, in both a demand deposit account and a time deposit account, the sources said.
The government’s committee on postal privatization plans to adopt an opinion paper including a proposal to that effect at a meeting by the end of the year.
On whether to raise the postal savings cap, Japan Post Holdings Co. and the internal affairs ministry have been in conflict with the banking industry and the Financial Services Agency.
Banks had strongly opposed the hike due to concerns over stronger market influence of the government-backed Japan Post Bank, which uses a sprawling network of post offices across the country.
“We strongly oppose any discussion to ease the cap for Japan Post Bank,” Koji Fujiwara, chairman of the Japanese Bankers Association, said in June. “There still hasn’t been a road map for the Japan postal services to be fully privatized and conditions for a fair competition has yet to be ensured.”
But they eventually backed off after it was agreed that the committee document will commit Japan Post Holdings, majority-owned by the government, to efforts to sell shares in Japan Post Bank out of its holdings at an early date, the sources said. Japan Post Holdings owns a stake of about 89 percent in the banking arm.
Under the postal privatization law, the committee reviews the postal savings limit every three years. The limit is decided under a government ordinance mainly in line with the opinion of the committee.
It would be the first increase in the postal savings limit since April 2016, when the cap was raised from ¥10 million to ¥13 million.
In addition to the sale of Japan Post Bank shares by Japan Post Holdings, the opinion paper will clarify that the bank will make efforts to diversify its asset management in order to boost earnings capacity in a way that does not interfere with the management of regional financial institutions, according to the sources.
The banking industry had called for maintaining the current mechanism under which the total savings cap is set for demand and time deposit accounts and for allowing a limit hike of only ¥3 million to ¥16 million.