TOKYO: A group of lawmakers from Japan’s ruling Liberal Demoractic Party (LDP) proposed to raise deposit limits on Japan Post’s banking unit to 30 million yen ($242,800) per account from 10 million yen, as the state-owned mail and financial giant prepares for initial public offerings later this year.
It remains uncertain whether the government will approve the higher limit for Japan Post Bank – the biggest bank in the country by deposits. Private-sector banks are fiercely opposed to the move as small community lenders are concerned about outflows of their deposit money to a bank indirectly owned by the government.
Japan Post President Taizo Nishimuro is also sceptical about the wisdom of raising the deposit limit, sources familiar with the matter said, as the bank is struggling to secure returns under Japan’s ultra-low interest rate environment.
Japan Post Holdings Co (IPO-JAPP.T) has banking and insurance units. The company is preparing to list its two units at the same time that it will prepare its own IPO later this year. The LDP lawmakers also proposed to raise the insurance unit’s payout limit to 20 million yen from 13 million yen now.
The LDP lawmakers have been discussing the deposit limit increase since March, after the party promised to review the limit in an election campaign last year in a bid to attract votes from politically-active post office masters.
Japan Post Bank has about $1.45 trillion in deposits as of March. Deposit limit and other restraints are currently imposed on the post bank by the government to ensure fair competition in the private sector.
The rationale for raising the deposit limit is that many pensioners with retirement funds have hit the ceiling at the post bank and those who live in remote areas lack access to other financial institutions.
