Post Office Banking Around the Globe
February 13, 2014 7:30 AM
Many politicians who are partial to big government, including Democratic Sen. Elizabeth Warren , are embracing a Jan. 27 proposal by the Postal Service's inspector general to allow the post office to sell prepaid cards and make small-dollar loans. Some have dubbed the proposal a "public option" for consumer financial services.
While the USPS inspector general envisions the private banking sector having some involvement in its proposal, many details of that role have yet to be determined. Countries around the world offer a variety of models on how to structure a postal bank. Following is a look at various approaches.
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Spain: P.O.s as Bank Agents
In Spain, as well as in Slovenia, and the Czech Republic, post office employees execute customer transactions on behalf of multiple private-sector banks. In effect, these post offices act as agents for banks. The transactions are processed using computer terminals that tap into the private-sector banks' systems. Customers generally cannot open accounts at post offices, but they can perform routine transactions there. The postal services benefit by getting a fee for each transaction they process.
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U.K.: Exclusive Partnerships
In the United Kingdom, the post office has an exclusive partnership with the Bank of Ireland to offer bank accounts to customers. The U.K. post office does not have a banking license, so partnering with the Bank of Ireland allows the government-owned company to participate in financial services. The post office bank accounts are currently available in only 110 locations, but there are plans to make them more widely available, as the post office moves into more direct competition with other U.K. banks.
(Image: Bloomberg News)
Germany: Privatizing
Germany's postal bank is more than a century old, but over the last 25 years it has been largely privatized. Today it is more than 90% owned by Deutsche Bank.
Although it's been spun off from the German post office, Postbank still offers select financial services at more than 4,500 post office branches. It also has 1,100 branches of its own.
(Image: Bloomberg News)
Italy: Partnering with Banks
In Italy, the post office has offered savings accounts for nearly 140 years. But because the postal service does not have a banking license, it cannot make loans on its own. The solution: Banco Posta, which is the post office's banking division, partners with private banks to write mortgages and make personal loans. In 2012, 67% of the Italian post office's profits came from financial services.
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Morocco: Low-Income Focus
In some countries, post offices have been granted banking licenses to serve a limited purpose. This structure allows them to compete against private banks for certain customers, while keeping them out of other markets. In 2010, a subsidiary of Morocco's post office was granted a limited banking license to serve lower-income consumers.
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China, France, Japan: Full Service
The post offices in China France and Japan all hold universal banking licenses, and they all compete against private-sector lenders in a wide range of product categories. As a result, these postal banks tend to be quite large. China's postal bank is the country's fifth largest. Japan's post office generates 90% of its income from financial services. Postal banks that hold universal licenses are rare, though. That's likely at least in part due to the challenge of meeting banking regulatory requirements.
