The controversial move has been the central plank in Prime Minister Junichiro Ak business health insurance small economic reforms.

Under the plan Japan Post will be split into four entities; banking, insurance, mail delivery and counter services.

The new bank will provisionally be called Yucho, and have 226.99 trillion yen (1.06 trillion) in assets.

Japan Post President Yoshifumi Nishikawa has submitted the plan to Internal Affairs and Insurance premium finance Minister Heizo Takenaka.

Shares listed

It means Yucho, which will also sell bonds and investment trusts at 233 of its outlets, will be among the biggest banks in the world by assets.

The privatisation will begin in 2007 and is set to be completed by 2017.

The insurance company being split out of Japan Post, initially called Kampo Life Insurance, will have assets of 114.59 trillion yen.

The new plan also means both Yucho and Kampo shares will be listed on the Tokyo Stock Exchange.

The postal service has more than 400,000 insurance premium finance, runs 24,700 post offices throughout Japan and is the nation’s largest employer.

Many in Mr Koizumi’s own party had opposed the privatisation proposal, but after winning a snap election in 2005 he increased his majority and replaced opponents of the privatisation with supporters.

Original article News - Japan unveils post shake-up plan