Japan Post would prefer to let sleeping dogs, and accounts, lie

May 18th, 2012 by Philip Brasor & Masako Tsubuku

Sleep tight: Japan Post data center in Chiba

Since last year, the government has talked about tapping so-called kyumin koza to help fund reconstruction in the areas hit by the March 11 disaster. Kyumin koza are “sleeping bank accounts,” meaning savings in financial institutions that have gone untouched for long periods of time. The government says it needs at least ¥50 billion for reconstruction, and every year banks “uncover” about ¥80 billion in unclaimed accounts, 90 percent of which contain less than ¥10,000 each. For banking purposes the definition of a kyumin koza is an account from which no transactions have been carried out for ten years and whose holder the bank has not been able to contact.

Under such circumstances, banks typically move this money into the plus column on their books, which is why the financial industry isn’t too crazy about the government’s plan to commandeer the comatose cash. The banks’ argument is that even though they have taken over this money, if the account holder does show up with proper identification and other pertinent documentation they will happily return it; but they couldn’t do that if the government has taken it first.

It’s a credible argument, though Japanese weekly magazine Gendai points out that ever since the end of the bubble era in the early 1990s, banks have become very strict about closing bank accounts, meaning that someone who had not touched their money for more than 10 years would probably require a lot of paperwork to prove the account was his. It would thus be very difficult for individuals to access accounts of family members who have died, since those individuals would have to produce death certificates, proof of relationship and other documents. Moreover, an account can only be closed at the branch where it was opened. It’s assumed that a large number of sleeping accounts have gone untouched because the account holder died without informing his or her family of its existence.

People like to open accounts because it’s free. There are an estimated 1.2 billion bank accounts in Japan for a population of 130 million. Compare that to South Korea, which has a similar banking system: 170 million accounts for a population of 50 million. Gendai also estimates that each “mega-bank” in Japan has about 1 million sleeping accounts, which yields them ¥10 billion each in profits. It’s easy to see why they’re nervous about the government’s plan, and also baffling as to why no other government entity in the past has considered using this money for the public good. (Former Nagano Prefecture governor Yasuo Tanaka once made an issue out of it but didn’t get far.)

However, there are two financial institutions that are not being scrutinized for their sleeping accounts: JA Bank and Japan Post. JA Bank is the savings/lending institution attached to the National Federation of Agricultural Cooperative Association, which has about 100 million savings accounts. According to the agriculture ministry, every year 500,000 of these are declared to be sleeping in accordance with banking protocols, and JA moves about ¥2 billion from these accounts into their assets column.

That’s chicken feed compared to sleeping accounts at the post office, which follows a different protocol. For a yubin chokin (postal savings account) to be declared sleeping, 10 years has to have elapsed since the last transaction, as with regular commercial banks. JP then sends a notification to the account holder asking for confirmation, and if there is no reply it waits another 10 years to send a second notification. If again there is no reply the account is closed and JP takes the balance outright. Japan Post was privatized in 2007, but the government still owns most of the stock so, in essence, the funds from abandoned sleeping accounts go directly into government coffers.

Between 2006 and 2009, it’s estimated that JP took ¥3 billion-¥6 billion a year from sleeping accounts, which isn’t much compared to the mega-banks. However, in 2010 the amount was ¥23.4 billion. Why the sudden jump? Because interest rates on postal time deposits were raised substantially in 1980 to counter inflation. The highest interest was paid on 10-year accounts, which matured in 1990. Consequently, 20 years later, in 2010, if any of those accounts had remained dormant in the meantime, JP could seize them. According to NHK, there will be other periods of windfall in the future. In the late ’80s and early ’90s interest rates were at their highest level ever.

JP has said that it sent out notifications for these sleeping accounts, but in many cases the notifications were returned because the person moved or died without telling other family members about the account. Gendai, however, seems suspicious about this claim, pointing out that the budget for notification and publicity is only ¥100 million in total, which seems hardly enough. JP said such publicity activities were “limited by the high cost of advertising.” One individual has gone to the trouble of posting a YouTube video explaining how he never received any notification about a postal savings account he opened in 1976 and when he went to close it the post office said it was too late.

There is an estimated ¥1 trillion total in sleeping accounts in Japan. Is any of that money yours?

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