/www.bloomberg.com/ By Daisuke Takato
Tokyo, Oct. 15 (Bloomberg) -- Japanese corporate bankruptcies fell for the second time in 13 months in September as 1,467 companies failed. Bankruptcies may rise as the economy slows and the government pushes to clean up bad loans.
Corporate failures fell 7.8 percent last month from a year earlier, credit-researcher Tokyo Shoko Research Ltd. said. The failed companies owed 705.2 billion yen ($5.7 billion) in debt, a fall of 79 percent from a year earlier.
Prime Minister Junichiro Koizumi wants banks to write off more than 50 trillion yen in bad loans that are throttling the financial system and starving the economy of fresh credit. Bankruptcies may accelerate with the appointment last month of Heizo Takenaka, who favors speeding up bad-loan disposals, as the minister in charge of the Financial Services Agency.
``The bad loan write-offs and bankruptcies are both inevitable if the country has any chance of returning to health,'' said Yasukazu Shimizu, a senior economist at Aozora Bank Ltd. ``Takenaka will likely push for a hard landing, and the economy will be in immense pain, at least for the short term.''
Rising bankruptcies are likely to push up an unemployment rate that's already hovering just below a record 5.5 percent. Members of Koizumi's Liberal Democratic Party are pressing for an extra spending package this year to soften the blow and create more jobs. That may force Koizumi to break his self-imposed limit of 30 trillion yen in new bond sales this fiscal year.
``Bankruptcies will continue at 1,500 cases'' a month, a near- record pace, Tokyo Shoko General Manager Hirotake Araya told Bloomberg Television on Friday. ``This is also a labor issue and the government would need a safety net to protect jobs.''
Bankruptcies last month were led by the failure of 470 construction companies, about a third of the total, and 270 wholesalers.
Japanese banks were saddled with 52.4 trillion yen in bad loans as of March 31, the Financial Services Agency estimates. That has contributed to a six-year slide in lending.
Governor Masaru Hayami last week said the Bank of Japan would help lenders avoid losses on investments in the stock market by buying 2 trillion yen of their shares.