Japan Goes Postal

Starting Monday, mailing a letter in Japan will have new meaning, and Citigroup will no longer be the world's biggest commercial bank.

That's because the Japan Post is going private. The privatization effort has been in the works since 2005, when the Japanese prime minister spearheaded a victory to turn the country's postal system into a private holding company with four separate businesses.

It's significant because the Japanese postal system is more than your typical mail carrier operation. It's also the world's biggest bank, with more than $3 trillion in assets.

Unlike Americans, the Japanese are savers, and their postal system has helped them achieve one of the highest savings rates in the world. As Slate.com explained when the Japanese voted on the issue two years ago, the Japan Post has served as a savings account for more than 130 years. Have a spare yen? Drop it into your Post account. It was regarded as an especially safe haven during the country's banking crises.

Today the Japan Post has 400 million accounts and operates 25,000 branches and more ATM's than any commercial bank in the country. A Post storefront operates as a bank, post office, and insurance agent all in one.

Proponents of privatization hope it will ignite a competitive fire in the country's banking sector. They want to put an end to wasting postal revenues on pointless government projects, and excessively buying government bonds. The practice has led to Japan's ballooning public debt, which is 160 percent of its gross domestic product, the Associated Press notes.

Privatization is expected to be a 10-year process, and the four separate businesses could eventually find a home on the stock market.

Of course, the progress of the newly private Japan Post is being closely watched by trade officials and banking interests in the U.S. The privatization "is fine in theory, unless it turns out they are creating an unfair advantage, an unlevel playing field," U.S. Trade Representative Susan Schwab told Congress earlier this year. "We will, if necessary, seek litigation."

by Megan Barnett