UPDATE 1-S.Korea IBK eyes Korea Post's financial unit

* Industrial Bank of Korea says needs to boost deposit base

* In talks with ruling party to buy Korea Post fin arm-report

* IBK shares edge down 0.5 pct versus steady wider market (Recasts with IBK comments, adds background and share price)

SEOUL, June 22 (Reuters) - The Industrial Bank of Korea (IBK) (024110.KS), majority owned by the South Korean government, said it was interested in the financial arm of the country's postal service agency to boost its deposit bases.

The remarks came after a newspaper said IBK had been in talks with the ruling Grand National Party (GNP) to take over deposit-taking and insurance businesses from the Korea Post.

"Once the privatisation plan of Korea Development Bank (KDB) shapes up, (the Grand National Party) will push forward a plan to sell Korea Post's financial services operation to Industrial Bank of Korea," the Dong-a Ilbo daily quoted the party's member of parliament Koh Seung-duck as saying.

He leads an economic committee of the ruling party.

IBK spokesman Huh Jae-young said its CEO Yoon Yong-ro had previously expressed interest in the financial arm of the Korea Post.

"Our view is that we need Korea Post's financial operations, because we are weak in funding," Huh said.

A Korea Post spokesman said he was looking into the report.

South Korea's government owned 65 percent of IBK as of late last month. Its small branch network has held back its efforts to win market share from big rivals such as Kookmin, Shinhan (055550.KS) and Woori.

The reported move may stir expectations about another wave of the domestic banking consolidation as the government is aiming to sell a stake in its wholly-owned KDB and Woori Finance Holdings (053000.KS) (WF.N).

Woori, 73 percent owned by the government, runs the country's No. 3 bank.

Shares in IBK shed 0.47 percent to 10,500 won by 0010 GMT, versus the steady wider market . (Reporting by Kim Yeon-hee; Editing by Jacqueline Wong)