Japanese lender SFCG, whose creditors include Citigroup, filed for bankruptcy Protection today triggering a slump in financial stocks on concern the country’s deepening recession will cause more failures.
SFCG, which focuses on loans to small businesses, listed 338 billion yen ($3.6 billion) in liabilities, making it the biggest bankruptcy by a publicly traded Japanese company in almost seven years.
The firm owed Citigroup 71 billion yen as of July 31st, according to a filing by SFCG on October 27th.
An index tracking Japanese non-bank lenders slumped to the lowest since at least 1983 on concern that the worsening economy, forecast to contract a record 4 per cent in the fiscal year starting April 1st, will cause financing to dry up.
SFCG Chairman Kenshin Ohshima said getting funding became "almost impossible" after developer Urban Corp went bankrupt in August.
"Up until now, bankruptcies were concentrated in the real estate and construction sectors, but the trend has widened to collapses across a broad range of industries," said Nobuo Tomoda, an analyst at credit and bankruptcy research firm Tokyo Shoko Research.
"It's getting harder to obtain funds." A record 33 publicly traded companies in Japan declared bankruptcy last year as banks trimmed lending and consumer spending dropped.
Hiroshima-based Urban filed for protection with 255.8 billion in liabilities on Aug. 13, the biggest failure last year among Japan-based companies.
Total corporate bankruptcies rose 15.8 per cent to 1,360 cases in January, the eighth monthly increase.
Bloomberg