General Motors Corp will talk to the Korea Development Bank (KDB) about selling a stake in GM Daewoo, if that would help its South Korean carmaking unit in the long term, Nick Reilly, President GM Asia Pacific, said on Friday.

Reilly said GM wants to keep GM Daewoo Auto & Technology as part of the group, citing the importance of engineering skills at South Korea's No.3 automaker.

If that helps GM Daewoo in the long term, we will talk about that with the KDB, Reilly told reporters in Seoul.

KDB officials said on Thursday the state-run bank was considering raising its stake in GM Daewoo, where it is the second-biggest shareholder, with 28 percent, behind GM's 51 percent.

Reilly said GM and KDB were discussing possible financial support for GM Daewoo, but he denied local media reports that KDB had requested a 30 percent stake in GM Daewoo. That is not true, he said.

GM Daewoo has requested additional loans from banks, including KDB, its main creditor, after using up a $2 billion credit line.

On Wednesday, KDB said South Korean banks decided to roll over the expiration of half of $890 million in short-term foreign currency forwards of GM Daewoo.

GM Daewoo is responsible for GM's small car design and engineering. Recently, global appetite for smaller cars has increased amid an economic downturn and as more customers seek fuel economy.

GM Daewoo sells almost 90 percent of its products overseas, including recession-hit Europe and North America, under the Chevrolet, Pontiac, Holden and Suzuki brands.

GM, has a June 1 deadline by which it must slash labor and debt costs, and prove its viability as a going concern, if it is to receive further emergency aid from the U.S. government and survive a downturn that has pushed sales to decade lows.

Rival U.S. automaker Chrysler LLC on Thursday filed for bankruptcy protection and said it would link up with Italian carmaker Fiat SpA after the failure of its debt restructuring talks.

(Reporting by Cheon Jong-woo; Editing by Ian Geoghegan)

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