The government must bolster the capital base of the planned public corporation set to take over postal savings and mail services from the Postal Services Agency in fiscal 2003, posts minister Toranosuke Katayama said Tuesday.

"If the planned corporation is to have the characteristics of a private-sector entity," said Katayama, minister of public management, home affairs, posts and telecommunications, "it is essential for it to have capital whose levels are similar to those of private-sector financial institutions."

Rules on a private financial institution's capital adequacy ratio require that a deposit-taking entity operating domestically has capital equivalent to 4 percent of its loan assets.

At present, the agency's capital stands at only 743.6 billion yen. The capital rules require a private lender to have adequate capital as a cushion against potential losses from borrowers that default on loans.

It requires pushing up the sum of the capital to some 10 trillion yen to recapitalize the agency to the point where it could clear the 4 percent capital-adequacy requirement.

The agency had a pool of 239 trillion yen in postal savings as of March 31.

"We would like to consider how to deal with the issue by taking into account the views of panelists" of an advisory council to the government on the planned establishment of the corporation, Katayama said.

Katayama intends to discuss the issue with Masaharu Ikuta, chairman of Mitsui O.S.K. Lines Ltd., who will head the planned public corporation, and other council members, ministry officials said.