Japan Post Bank Co. Ltd., a government-owned behemoth with assets of more than ¥200 trillion, is pursuing an extreme makeover of its institutional investment capabilities to grease the skids for its initial public offering later this year.
Managers of higher margin fixed-income strategies could be the main beneficiaries, analysts predict. But with each percentage point shift in the bank's allocations putting $17 billion of capital in motion, external managers will be on the lookout for even tentative moves into higher-risk market segments, those analysts say.
Taizo Nishimuro, president of parent company Japan Post Holdings Co. Ltd., Tokyo, announced on Feb. 18 the goal of recruiting a new, high-powered investment team this year, to be tasked with a top-to-bottom review of the bank's approach to investing its ¥205.3 trillion ($1.7 trillion) portfolio.
The traditional approach has focused on internal management of a portfolio dominated by holdings of Japanese government bonds — currently yielding next to nothing — and other low-risk investments.
Japan Post executives effectively have conceded the low-risk investment strategy that sustained a government-owned bank providing financial services to individuals through 24,000 post offices across Japan will prove less than ideal for a firm looking to sell shares to private investors by the end of the year.
For the first nine months of the fiscal year that will end March 31, Japan Post Bank reported a 0.97% return on its investments, up from 0.93% for the same period the year before.