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* Open to Bank of Commerce stake dilution -President
* Still in Internet talks with Telstra -President
* To launch $632 bln preferred share sale in March -CFO
By Neil Jerome Morales and Karen Lema
MANILA, Feb 13 (Reuters) - San Miguel Corp SMC.PS has decided to keep its $500 million controlling stake in an unlisted bank, opting to pursue growth in the sector instead of exiting due to lack of presence, the president of the Philippine conglomerate said on Friday.
San Miguel, whose varied interests include power generation, telecommunications and beer, now plans to inject up to 6 billion pesos ($126 million) in Bank of Commerce, President Ramon Ang said in an interview, after failing to find a buyer.
"We are never going to sell," Ang told Reuters. "We can be a minority shareholder if someone can put money in and manage it."
San Miguel has been looking to sell out of banking for at least two years and use the proceeds to expand in oil and gas. It came close in 2013 when talks ended with Malaysian lender CIMB Group Holdings Bhd CIMB.KL , and again in October last year with Japan's Mizuho Financial Group Inc 8411.T .
The conglomerate has pursued aggressive expansion since 2008 in search of revenue, adding such businesses as mining and oil refining to its staple of food and beverage. It is still looking for acquisitions, but will now keep banking in its portfolio.
San Miguel owns about 60 percent of Bank of Commerce, ranked 17th locally by assets. It aims to grow the lender through its application for a universal banking licence which would allow it to offer investment banking services, Ang said.
Astro del Castillo, managing director of brokerage First Grade Finance, said the challenge for Bank of Commerce is simply to attract more customers, both retail and institutional.
"They have to boost their accounts and their lending and that is a lot of work," del Castillo said.
San Miguel plans to sell up to 73 billion pesos worth of preferred shares over three years, partly to fund expansion. It will offer the first 30 billion pesos worth in March, said Chief Financial Officer Ferdinand Constantino at the same interview.
Ang also said talks to partner Australia's Telstra Corp Ltd TLS.AX in Internet services in the Philippines were ongoing, but that San Miguel could launch a service alone this year.
"With or without partners we will go ahead," he said.
Telstra late Friday confirmed the ongoing negotiations.
"We are still in talks with San Miguel on a potential investment in the Philippines," James Molan, group manager for international communications of Telstra, said in an e-mail.
($1 = 47.4970 Philippine pesos)