Sumitomo Mitsui Trust Bank eyes Japan Post-related profits via Sakurai hire

Updated : 09.11.2016 / Category Capsule

Within Sumitomo Mitsui Trust Bank, the appointment of Shun Sakurai as an advisor has been dubbed an "Atsushi matter," in reference to Atsushi Takahashi, who helmed the bank for 13 years as president and chairman.

Sakurai, the father of pop idol Sho Sakurai, landed the post in September, three months after retiring from the Ministry of Internal Affairs and Communications, where he served as vice minister. An executive of the bank explained that Sakurai's hiring was aimed at acquiring his input on the bank's fintech and other IT undertakings. Nonetheless, it is "unprecedented" for a former government official who supervised postal services to take up a position in the banking industry, according to a megabank source.

Sakurai's appointment was reportedly orchestrated by Takahashi, whose tenure as head included the years prior to Sumitomo Trust Banking merging with two other banks to form the current bank in 2012. Now a senior advisor, "strongman" Takahashi still wields tremendous power over the bank's affairs.

Takahashi has long maintained robust ties with postal service-related government officials. As president of Sumitomo Trust Banking, he helped forge the first ATM tie-up with post offices despite fierce opposition from other banks, who claimed the move would have grave implications for the private banking sector. The move appears to have been beneficial for the bank itself, however: When three Japan Post Group firms were simultaneously listed on the Tokyo Stock Exchange last November, Sumitomo Mitsui Trust become their sole securities agent. "The Japan Post side was perhaps returning a favor," the megabank source said.

Rival banks view the appointment of Sakurai—who famously declined the Liberal Democratic Party's request to run in the Tokyo gubernatorial election in July—as designed to help generate profits from "different vested interests in relation to Japan Post," according to an executive at Mitsubishi UFJ Trust and Banking.

The Financial Services Agency, however, is presently casting a steely glare in the direction of the trust banking sector. Even though the sector is a gigantic institutional investor, which handles the majority of pension funds invested in the financial markets, the agency believes that trust banks do not sufficiently provide loans to the nation's growing industries from their vast trust banking business funds. "As a leading beneficiary [from pension fund investments], they are not adequately dealing with [the provision of funds to] enterprises," a high-ranking agency official said.

Some agency hardliners are even calling for a review of the trust banks' business model, including the advisability of allowing such banks to provide corporate loans.

Given this situation, some Sumitomo Mitsui Trust employees are concerned that Takahashi might potentially make some bold moves. "We hope [Mr. Takahashi] will refrain from taking actions that could provoke the authorities," a concerned insider said.

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This is a translation of an article from the November 2016 issue of Sentaku.