Japan Post Bank Co. filed for government approval for new lending services, including housing and business loans, on Sept. 3.
The application was submitted to the Financial Services Agency chief and the minister of Internal Affairs and Communications.
If it obtains approval, Japan Post Bank would start those operations as early as next April.
"These are pressing issues in management," a company executive said after the filing. "We hope the applications will be approved as early as possible."
The bank, which is under Japan Post Holdings Co., has the largest deposit amount in the country and a nationwide network of post offices.
Local banks and others are concerned about Japan Post Bank's business expansion. The government currently owns all stakes in the group.
"If Japan Post Bank launches competition on interest rates, backed by the credibility of the state, the finances of other banks could suffer," a bank official said. "The move will suppress private industry."
Japan Post Bank wants to start housing loans for salaried workers; unsecured credit card loans for individuals; specialized loans for education, vehicle purchases and other purposes; and lending for businesses.
If those are approved, Japan Post Bank will handle almost all kinds of lending services.
"The bank has laid out all it wants to do," a government official said.
The bank invests 70 percent of its total assets of 195 trillion yen ($2.5 trillion) in government bonds. But those currently yield only small margins, and they could become even less profitable in the future.
Recently the bank has seen many of its customers migrate to private banks that offer higher interest rates, and the balance of deposits in Japan Post Bank has fallen by some 10 trillion yen in the past five years.
Observers believe the bank needs to shore up its interest rates and other services with profits from the new loan businesses.
In April, the postal privatization review law was enacted, which allows the government to continue to hold stakes in Japan Post Bank and Japan Post Insurance through the holding company. The government panel on postal service privatization has since re-examined its application screening standards in favor of the Japan Post group and is set to approve Japan Post Bank's applications. The Financial Services Agency chief and the Internal Affairs and Communications minister are expected to honor the panel's judgments.
Japan Post Insurance Co., a life insurer under Japan Post Holdings, also applied for permission to sell new products in educational insurance.
(This article was written by Satoshi Daiguji and Yukio Hashimoto.)
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