Post No Bills

by Kensatsukan Gaijin

2015 is almost over, and this year’s biggest IPO (Initial Public Stock Offering) is already breaking records - at $11.5 billion, 

What is it?  An internet company?  An entertainment producer?  An oil conglomerate?  


It’s the Post Office. 


The Japanese Post Office, to be exact. Japan Post, which is listed on the Tokyo Stock Exchange, was the largest offering since the $25 billion debut last year of Alibaba, the Chinese Internet giant. It is also the biggest privatization in Japan since 1987, when the government began selling off the state-owned telephone monopoly.  Like Germany and Great Britain before it, Japan has finally decided to part with its government-run Post Office bank. 


The Post Office is a a crucial institution for the citizens of Japan. It has 24,000 post offices, far outnumbering all branches of Japan’s national banks combined. Most post offices deliver mail, take bank deposits and sell life insurance in the same building. In rural areas, they often serve as the principal lifeline to the outside world of commerce. It has been an institution since 1871, when it began as a state-owned entity designed to bring basic postal and financial services to distant corners of Japan.  Prior to that several nations maintained foreign post offices. The British maintained post offices in Yokohama (opened 1859), Nagasaki (1860), and Kobe (1869).  The United States opened post offices in Yokohama and Nagasaki in 1867, in Kobe in 1868, and in Hakodate in 1871, using US stamps, and closing in 1874.  


In 1870, Baron Maeshima visited London to learn the workings of the British postal system, and founded Japan's postal system in 1871.  Maeshima brought back Britain’s model, which included not only mail service, but also banking and savings services for average citizens.  Soon, the Post Office began to make pension payments and accept payments for utilities and other services.  Today, a Post Office account is necessary to pay several important bills and to function in modern society.  


However, the Post Office is not just a bank for the citizens of Japan.  It’s also a key source of funds for the government.  Whether it was a new bullet train line, aid for struggling small businesses or money to finance the national debt, politicians could call on Japan Post to assign a portion of Japanese citizens’ nest eggs to the task, through the nationwide network of savings banks it operates through its more than 20,000 post office branches.  Japan Post’s savings bank holds the equivalent of more than $1.4 trillion of deposits, making it one of the world’s biggest financial institutions. Part of that is due to Japanese culture; Of the $1.7 trillion in financial assets held by Japanese citizens, 51% of that is deposits with banks, while in the US the figure is about 12%.  


It is also a key ally for any aspiring political candidate or party.  Rural postmasters can become politically powerful, given that they have intimate connections with their community, often know everyone in town, and own the land under their post office.  They often hand their position down to their children and can be vital to political power in Tokyo.  Junichiro Koizumi, who became Prime Minister in 2003, attempted to privatize the bank a decade ago, but instead saw his own party lose crucial support and ultimately lost control of the government to another party.  However, he managed to introduce fundamental reforms that laid the groundwork for this week’s IPO.  


A glut of buy orders for shares of Japan Post Holdings meant the stock went untraded for more than half an hour on its first day on the market. It ultimately made its debut at 1,631 yen — or $13.49 — per share, 16.5 percent higher than its I.P.O. price. Two subsidiaries that operate banking and insurance businesses, which were listed separately, also faced a surplus of buy orders. Japan Post Bank finally opened at ¥1,680, up 16 percent from its I.P.O. price, and Japan Post Insurance opened 33 percent higher.

Japan Post Holdings finished 25.7 percent above its I.P.O. price at ¥1,760. Japan Post Bank ended 15.2 percent higher at ¥1,671, and Japan Post Insurance closed up 55.9 percent at ¥3,430. The Nikkei 225-stock average closed 1.3 percent higher






The New York Times

The Wall Street Journal

The Financial Times