South Korea's financial regulator will make utmost efforts to complete the restructuring of unprofitable and highly indebted companies within the year to cushion any fallout on the economy from their sudden collapse, officials said Sunday.

The number of "zombie companies," which can't generate enough operating profit to pay taxes and interest payments or require constant bailouts, reached 3,295 as of end-2014, up from 2,698 in 2009, according to recent data compiled by the Bank of Korea.

The portion of such troubled companies increased to 15.2 percent last year from 12.8 percent five years earlier.

According to the officials, the Financial Services Commission and the Financial Supervisory Service, the financial market governing and oversight bodies, have recently decided to wrap up the overhaul of the ailing companies by the end of the year.

"The government and related agencies share the view that corporate workouts, court receiverships and other restructuring measures should be taken against those ailing companies within the year," a financial official said.

That's because financial conditions of those companies are worsening fast and a parliamentary election scheduled for April next year could make the corporate restructuring drive harder, he said.

Market watchers had expected the financial authorities to single out zombie companies by early 2016 and take measures to restructure them after the envisioned election.

In a related effort, the head of the FSS is scheduled to meet with heads of major banks early this week to call on them to restructure troubled companies in a quick and stringent manner and seek their support for financial reform, according to the officials.

The financial authorities have announced strict measures to deal with the problem of zombie firms amid growing economic uncertainties, including a cooling Chinese economy and a looming U.S. interest hike.

The FSC and FSS have required local banks to tighten their screening of corporate loans and weed out bad debts. Banks, which do not write off bad corporate loans, will be obliged to set aside additional loan loss reserves. (Yonhap)