Japan Post said on Tuesday it was planning to offer mortgages, credit cards and small business loans following its privatisation in October this year, in a move that would introduce a massive competitor to private Japanese banks in areas they consider vital to their growth.

The post office, whose privatisation was a pet project of Junichiro Koizumi, the previous prime minister, is currently restricted to taking deposits and making limited loans. But its total deposits of Y189,314bn ($1,616bn, €1,215bn, £832bn) mean that it will become the world’s largest bank by assets once privatised, overtaking Japan’s Mitsubishi UFJ, which has deposits of Y115,600bn.