Japan Post IPO could raise $20-40 billion: banking sources

Japan Post Holdings Co Ltd could raise as much as 4 trillion yen ($40 billion) when it sells shares to the public, bankers familiar with the deal said on Thursday, based on their assessment of market appetite for the state-owned financial services giant's planned IPO.

Japan Post also said it aims to move forward the timing for its long-anticipated initial public offering by about six months to the spring of 2015, which one broker attributed to an improved outlook for the state behemoth's insurance business.

Brokerages asked by Japan Post to gauge demand for the offering found that the market could absorb some 2 trillion to 4 trillion yen worth of shares, the bankers told Reuters.

Japan Post is also set to enter a broad tie-up with American Family Life Assurance Co to sell Aflac's cancer insurance products at thousands of post offices nationwide, which domestic media said followed an agreement with the United States related to a big multilateral trade deal.

The Japanese government had originally planned to list Japan Post Holdings' shares around September or October 2015 to raise money for reconstruction of areas devastated by the March 2011 earthquake and tsunami.

"(Now) we are aiming at spring" of 2015, Japan Post President Taizou Nishimuro was quoted by a company spokeswoman as telling domestic media. "We will prepare for the IPO in an expeditious manner."

In addition to a national network of more than 20,000 post offices, Japan Post runs the country's biggest banking and insurance operations, overshadowing non-state lenders and insurers which chafe at the state company's dominance.

Japan Post's private-sector competitors have been pressing the government to restrain its financial businesses, arguing that it otherwise stifles competition.

Japan Post's banking unit has 176 trillion yen in customers' savings deposits, compared with banking leader Mitsubishi UFJ Financial Group Inc's <8306.T> 132 trillion yen. Japan's Post's insurance arm has 90 trillion yen in assets, far bigger than Nippon Life Insurance Co's 55 trillion yen.

At the same time, Washington has for decades pressed Tokyo in trade negotiations to exclude major Japanese life and non-life insurers from the domestic "third sector" of insurance products such as cancer insurance - a niche that Aflac has long dominated with about a 70 percent market share. The Columbus, Georgia-based company counts on Japan for almost 80 percent of its business.

The tie-up between Japan Post and Aflac, expected to be announced on Friday, was a concession to U.S. pressure to keep Japan's big private insurers from squeezing Aflac out of the third sector, Japanese media reported on Thursday.

But the top government spokesman, Yoshihide Suga, denied that the deal is related to negotiations with the U.S. government or the Trans-Pacific Partnership trade talks, which Japan joined this week. Rather, he said, it was a business decision by Japan Post's management.

Japan Post declined to comment on the size of the IPO or the Aflac deal. Aflac also declined to comment.

(Additional reporting by Taiga Uranaka and Kaori Kaneko; Editing by William Mallard and Edmund Klamann)