Major South Korean banks and insurers are planning to pay record high dividends for their 2014 fiscal year, industry sources said Monday, rekindling heated debate that it would only line the pockets of foreign shareholders.

According to the sources, Shinhan Financial Group Co., the No.1 player by market capitalization, has announced that it will pay out a record 512.4 billion won ($465.7 million) in dividends at 950 won per share, up from 650 won the previous year.

Its dividend payout ratio, referring to the proportion of earnings paid out as dividends to shareholders, will rise to 21.6 percent this year from 16.2 percent.

Runner-up KB Financial Group Inc. is planning to pay out a total of 301.3 billion won to its shareholders, compared to 193.1 billion won in cash dividends that the company had paid the previous year.

Woori Bank is also planning to grant up to 700 won in dividend per share, a surprising move from the state-run bank, which did not give any dividends to its stockholders last year.

Samsung Fire & Marine Insurance Co., the country's largest non-life insurer, will deliver a total of 198.8 billion won in dividends, while No. 2 Dongbu Insurance Co. will pay out 91.8 billion won.

Insiders noted that a surge in 2014 net profits forced financial institutions to pay out more dividends to shareholders as they set aside less money against bad loans.

Shinhan Financial posted a net profit of 2.08 trillion won last year, up 9.6 percent from a year earlier.

The net income of KB Financial jumped 10.2 percent on-year to 1.47 trillion won for 2014, while Woori Bank logged a net 1.2 trillion won last year, a turnaround from a net loss of 537.7 billion won the previous year.

Insurance companies were also on a roll with their combined net profit rising 16.9 percent on-year to 5.6 trillion won last year.

Some analysts welcomed the expansion in dividends by local financial firms as South Korean companies have relatively lower payout ratios compared with global listed firms.

"Companies have to return their profits to their investors and let the money circulate, if they don't have any plan to make proper investments," said professor Yoon Seok-hun from Soongsil University in Seoul.

Others, however, argued that the dividend payouts by local financial institutions would end up in an outflow of national wealth, as nearly 70 percent of major banking groups are owned by foreigners.

They said U.S. Loan Star Fund had racked up more than 2 trillion won through dividends during its 10-year reign of Korea Exchange Bank (KEB). Its dividend payout ratio reached 68.5 percent in 2010, up from 10.3 percent in 2008. Lone Star also pocketed 4.6 trillion won by selling KEB to Hana Financial Group Inc. in 2012.

Local units of two global banking giants, Citibank Korea Inc. and Standard Chartered Bank Korea, have sent a combined 3.25 trillion won to their headquarters through dividend payouts over the past 10 years up to 2013. The amount accounted for 56.2 percent of the two bank's combined net income of 5.8 trillion won over the cited period.

"Higher dividends can result in a drain of national wealth," said Ahn Jin-geol, a deputy secretary general of the non-profit People's Solidarity for Participatory Democracy. (Yonhap)