OREANDA-NEWS. December 22, 2015. Japan Post Bank (JPB) has potential to disrupt the operations of Japan's mid-sized and regional banks - and possibly major banks - following its IPO in November 2015.

JPB has Japan's largest deposit base and rivals the mega banks in asset size. We expect JPB to diversify its assets, which are concentrated in JGBs (45%), loans/cash with banks (24%) and other investments (30%). Its extensive nationwide reach should help it to boost its small loan portfolio, including penetrating relatively higher-margin sectors. JPB is also likely to diversify its earnings.

Fitch sees JPB being a credible challenger to the incumbents in Japan, where credit growth has been persistently low. Fitch does not expect the additional competition to directly trigger rating actions on banks in our portfolio, although the impact on market share and profitability would be harder felt should the operating environment weaken. But the chance of negative rating actions would increase if the banks react to JPB's challenge by taking outsized risks relative to their risk buffers.

JPB is unrated, but we believe the bank would be viewed by the authorities as systemically important and therefore a candidate for state support, in case of stress.