TOKYO: Japan Post Holdings Co (IPO-JAPP.T) said it would launch a joint venture to sell investment trusts at post offices, as the state-owned giant seeks new revenue sources in the lead-up to a public offering later this year.
The company said it would start the joint venture with Sumitomo Mitsui Trust Bank Ltd and Nomura Holdings Inc. It said the venture plans to start selling investment trusts at post offices in February 2016.
Japan Post has already been selling investment trusts, as mutual funds are called in Japan, managed by other asset management companies at about 1,300 post offices.
Japan Post Bank President Masatsugu Nagato told a news conference Japan Post had decided to sell its own investment trusts to better fit the needs of post office customers, who want simpler, easy-to-understand investment products.
The company said specific sales and other targets had not been determined, but Nagato said the venture was unlikely to have an immediate impact on Japan Post’s earnings.
Currently, Japan Post earns about 10 billion yen ($80.8 million) annually in fee revenues by selling other companies’ investments trusts. For the year ended in March, the company’s overall revenue was about 14.3 trillion yen.
Japan Post, whose banking unit is the country’s biggest deposit-taking institution with $1.4 trillion in deposits, is betting on a major shift in Japanese households’ money management practices, which have long been very conservative.
Japanese households have 1,700 trillion yen in financial assets, with a little over half held in cash or deposits, Bank of Japan data showed. Investment trusts account for 5.6 percent of households’ financial assets.
In comparison, cash and deposits make up 13.3 percent of U.S. households’ financial assets, while investment trusts account for 12.9 percent, the same BOJ data showed.
Japan Post Holdings President Taizo Nishimuro told the same news conference that the company had decided to withdraw the nomination of former Toshiba Corp executive Fumio Muraoka to its board.
“We wanted to strengthen auditing and Muraoka is professional in the area,” said Nishimuro, who was president of the electronics conglomerate and is still adviser to the company. “But his name was mentioned in the panel report. It’s difficult to have him on our board in this situation,” he said.
Muraoka, a former senior executive vice president of Toshiba, was chairman of the conglomerate’s audit committee between 2011 and 2014. An independent panel probing the company’s accounting irregularities since 2008 said the audit committee failed to perform its duties for internal controls.
