Japan's parliament approved the privatization of the country's postal service Friday, setting in motion the creation of the world's largest private bank and delivering a crucial victory in Prime Minister Junichiro Koizumi's reform program.

The upper house passed the closely watched legislation on a vote of 134 to 100, paving the way for its enactment. The powerful lower house overwhelmingly passed the package on Tuesday.

The bills authorize splitting up and selling off Japan Post's delivery, savings deposit and insurance services by 2017. The system controls some 330 trillion yen ($2.9 trillion) in savings and insurance deposits.