February 12, 2010 / 3:26 AM / 10 years ago

Japan's Kamei: Japan Post could buy more US bonds

(For more stories on the Japanese economy, click [ID:nECONJP])

TOKYO, Feb 12 (Reuters) - Japanese Banking Minister Shizuka Kamei said on Friday that Japan Post, the huge government-owned postal and financial conglomerate, could buy more U.S. Treasuries as one way to reduce its current heavy focus on domestic government debt.

Japan Post is the largest holder of Japanese government bonds and a big move to diversify by its two financial units — Japan Post Bank and Japan Post Insurance — could rattle the government bond market at a time when the national debt is nearing 200 percent of the country’s gross domestic product.

Kamei floated a similar idea last week, the Financial Times reported, saying Japan Post should buy more corporate bonds and U.S. Treasuries. [ID:nTOE61100N]

The government has said, however, that it is unrealistic to drastically change Japan Post’s financial portfolio in the short-term.

Many analysts also doubt Japan Post, which holds more than three-quarters of its assets of about 300 trillion yen ($3.3 trillion) in JGBs, can sharply cut its JGB holdings because of concern that the selling could destabilise the market.

They also say the bank, despite its size, has few financial experts to make more active investments anytime soon.

Although Japan Post has attempted to expand its lending since the government began a 10-year privatisation process in 2007, the effort fell through and its government bond buying has increased.

The privatisation plan was frozen last year after the Democratic Party-led government ousted the long-ruling Liberal Democrats in an election. Kamei, in charge of postal reform, has said he would submit a final draft on Japan Post’s future by next month. (Reporting by Noriyuki Hirata; Writing by Hideyuki Sano; Editing by Hugh Lawson)

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