Aug. 19 (Bloomberg) -- Japanese banks halted transactions with 12 percent more companies in July than a year earlier, the biggest increase since May 2007, as the firms issued checks that bounced. The number of companies in the Tokyo area cut off by banks rose to a two-year high.
The banks stopped doing business with 475 companies, whose liabilities rose 35 percent to 143.8 billion yen ($1.3 billion), the Japanese Bankers Association said in a statement yesterday. Banks stop lending to and doing business with companies that bounce checks twice within a six-month period.
The construction industry accounted for the largest share of companies that couldn't meet their obligations, at 38 percent. More than half of borrowers that didn't have sufficient funds for checks issued blamed it on a decline in sales, the statement said.