Japan Post Bank bought about 300 billion yen ($3.3 billion) in U.S. Treasuries in the October-December quarter, the first time the bank bought U.S. Treasuries since the start of its privatization process in October 2007, the Nikkei business daily said on Monday.
Japan Post Bank, a unit of Japan Post Holdings Co, parks roughly 80 percent of its nearly 190 trillion yen in assets in Japanese government bonds, and the bank bought Treasuries in order to diversify its assets, the Nikkei said.
Japan Post Bank apparently bought U.S. Treasuries in October-December without hedging against foreign exchange risk, the newspaper said without citing sources.
The dollar traded in a range centering roughly around 90 yen in the October-December quarter and slid to a 14-year low of 84.82 yen on trading platform EBS in late November.
The bank's balance of foreign securities was nearly 3.6 trillion yen as of the end of 2009, a 2 trillion yen increase from March 2009, the Nikkei said. Even after such an increase, foreign securities accounted for less than 2 percent of its overall assets, the newspaper said.
At the start of its privatization process, Japan Post Bank reduced holdings of risk assets such as stocks and foreign bonds, the Nikkei said. But the bank has gradually invested in overseas bonds including euro-denominated bonds and yen-denominated foreign bonds in an attempt to gain higher yields, it said.
The bank is also believed to hold dollar-denominated corporate bonds, the newspaper added.
The Nikkei report comes at a time when the government is preparing to announce privatization plans for Japan Post, an enormous state-owned financial conglomerate that includes Japan Post Bank and Japan Post Insurance.
The plan, the symbol of former prime minister Junichiro Koizumi's market-friendly reforms, was put on hold after the Democratic Party-led government took power last year.
Banking Minister Shizuka Kamei has said that he wants Japan Post to diversify and that it could buy more U.S. Treasuries, but he later said its money is important for the stability of the domestic bond market.
(Reporting by Kaori Kaneko; Editing by Chris Gallagher)