Sour Loans Rise Fivefold in Japan

TOKYO - Japanese financial companies experienced a fivefold increase in bad loans to domestic corporations in the 12 months ended April 30, according to a survey conducted by Teikoku Databank Ltd., a private research institution.

The increase, to $19.6 billion from $4 billion, reflects rising bankruptcies, primarily among companies that speculated in stocks and property using loans from financial firms, Teikoku said.

In the previous 12-month period, bad corporate debts at home declined 14.2%.

The survey noted that 324 Japanese companies, with more than one billion yen in debts, went bankrupt during the latest 12 months.

Although government restrictions are helping to curb lending by financial companies to asset speculators, bad debts may continue Teikoku said.

Of the $19.6 billion bad loans cited, nonbank financial firms accounted for 74.1%.

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