TOKYO -Japan's lower house of parliament narrowly approved a bill to create the world's largest bank -surpassing both America's Citigroup Inc. and a Japanese contender expected to briefly hold the title after a merger.
The source of this great wealth? The country's post offices.
The bank will emerge from the privatization of Japan's sprawling postal service, which offers savings accounts popular with a population that loves to save. State-run Japan Post controls $3 trillion in savings and insurance deposits. Under the bill, it would be privatized by 2017, after a series of intermittent reforms.
Proponents say privatization would make more efficient use of those funds for investment.
The close 233-228 vote, which reflected deep divisions in the ruling Liberal Democratic Party, was a bittersweet victory for Prime Minister Junichiro Koizumi, who had made the reform the centerpiece of his government since winning re-election last year.
Passage by the lower house sends the bills to the upper house. But even rejection by the upper house would not block the legislation, since the lower house can override that with a second vote.
It was a close match
but I'm relieved now that the bills were passed without disruption Koizumi said. There were more of those who were against the bills than expected.
The bills were opposed by many of the country's 400,000 postal system employees, a powerful lobbying group. Some 3,000 workers, fearing that privatization threatens their jobs, protested against the plan Monday in Tokyo.
The closeness of the vote -the plan garnered only one vote above the minimum 232 needed for passage -illustrated how deeply divisive the issue is in Japan. The Cabinet decided to dismiss four dissenting LDP lawmakers from administrative posts after the vote.
Opponents accused Koizumi of ramming the bills through Parliament, and they vowed to take their fight to the upper house.
The bills call for dividing state-run Japan Post into separate businesses for mail delivery, banking services and insurance starting in 2007. A fourth company would handle employee salaries and manage post office properties. All four companies would be grouped under a holding company at first, but the umbrella organization would then sell its shares in the banking and insurance enterprises by 2017.
Excluding its insurance accounts, Japan Post boasts savings deposits alone of $1.9 trillion -some three times those of Mitsubishi Tokyo Financial Group Inc., which at $600 billion is Japan's biggest private holder of deposits.
The postal system has some 25,000 branches around the country, while Japan's seven nationwide banks combined have only 2,606 branches.
U.S.-based Citigroup Inc. is currently the world's largest bank in terms of assets, with $1.48 trillion. But shareholders of Japanese banks Mitsubishi Tokyo Financial Group and UFJ Holdings Inc. last month approved a merger that will pave the way for creation of a bank with $1.7 trillion.
That would surpass Citigroup, at least until the merged bank is projected to be overtaken by the privatized Japan Post.
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