The Japan Post story looks increasingly like one of those Byzantine plots in an arcane samurai drama — although with its cast of mainly grey men in mainly grey suits, it’s not quite so vivid.
But the broader significance of the furious internecine tussle playing out in Japan’s government and bureaucracy over the future of Japan Post is really about control of one of the world’s largest pools of money.
As of the end of March, the companies under Japan Post had a whopping Y305,900bn ($3,400bn) of assets, according to its financial statements, with Japan Post Bank — the saving-vehicle of choice for much of middle Japan — and Japan Post Insurance accounting for Y303,100bn of those assets. Japan Post Bank alone had Y178,200bn (or nearly $1,900bn) of customer savings at the end of June, making it the world’s largest bank by deposits.
No wonder politicians get excited. The most recent chapter of this saga has gone on for some years, starting with moves by former prime minister Junichiro Koizumi to push through the privatisation of the 138-year-old postal service during his 2001-06 premiership. The postal behemoth was broken up into four separate — but still related — units, in preparation for their sale to stock market investors, possibly by 2010.
Nothing that involves that much money was ever going to be easy. But the advent of the Hatoyama administration in September — and the appointment of Shizuka Kamei as one of the most — err, combative — financial services ministers Japan has ever seen, has turned Japan Post into a massive financial football.
We set the scene on Tuesday for what became a virtual overnight coup by Kamei. As Bloomberg reports on Wednesday, the government forced out Japan Post chief Yoshifumi Nishikawa and appointed former finance ministry official Jiro Saito to replace him after definitively scrapping plans to privatise the company.
Just days before, Kamei had told the FT he intended to radically overhaul Japan Post and develop a new business model to use its assets to fund regional domestic development and expand into overseas lending.
In the eyes of many observers, the latest twists at the postal service signify a backtracking by the government on pledged reforms — particularly on the issue of how Japan Post’s considerable assets will be used by a government with vastly ambitious spending plans, and also on the old practice of appointing bureaucrats to cushy positions.
Prime Minister Yukio Hatoyama had pledged to end the practice of moving bureaucrats after retirement to head companies in industries they have regulated, a practice known in Japanese as “amakudari”, or “descent from heaven”.
The Japan Post move, as one Japan-based investment manager told Bloomberg, “may be taken by foreign investors as a ‘back to the future’ policy decision”.
Indeed, Kamei told reporters on Wednesday that Saito’s status as a former bureaucrat would not be a problem, and praised him as “a decisive leader” and a long-time friend. All of which suggests that we will see a lot more of Japan Post’s considerable assets going towards the government’s regional development plans and other measures.
Related links:
Japan’s minister for currency fluctuations strikes again – FT Alphaville
Japan’s new ministers for disruption – FT Alphaville
Japan and Kamei – Lex