By P.R. Venkat, Atsuko Fukase and Cris Larano

Mizuho Financial Group Inc. is in talks to buy a stake worth over $500 million in Philippine lender Bank of Commerce, the latest in a string of investments by Japanese banks in Southeast Asia.

Mizuho, Japan's third-largest bank by revenue, is in talks to buy the 60% stake from Philippine conglomerate San Miguel Corp., people with knowledge of the process said. The Japanese bank has made an offer that the Philippine company is evaluating, one of them said.

Beer-brewer-to-real estate giant San Miguel has tried to sell its stake in the Philippine bank in the past, but failed to come to a deal because it didn't receive the valuations it sought for the bank. Bank of Commerce is the Philippines' 15th largest bank by assets with 123 branches across the country.

A successful acquisition by Mizuho would help the lender catch up in the race by Japanese banks to find assets in Southeast Asia, which has seen loans soar in contrast to their domestic market where razor-thin interest rates have weighed on earnings.

Japanese banks have also pushed forward in Southeast Asia to follow their clients and as they diversify their operations away from China amid lingering tensions between Beijing and Tokyo.

Mizuho, which posted a 7% drop in its April-December net profit last month, has however been behind its bigger rivals in getting exposure to Southeast Asia. It bought a 15% stake in the Joint Stock Commercial Bank for Foreign Trade of Vietnam for $760 million in 2011, its only Southeast Asian play so far.

Mitsubishi UFJ Financial Group Inc., Japan's largest lender by assets, took a $5.6 billion majority stake in Thailand's Bank of Ayudhya PCL, the biggest purchase by a Japanese financial institution in Southeast Asia a couple of years ago. Also in 2013, Sumitomo Mitsui Financial Group Inc. took a 40% stake worth $1.5 billion in Indonesian lender PT Bank Tabungan Pensiunan Nasional. The two also have other interests in Southeast Asia.

For buyers, the Philippines' banking market is attractive because it sits in an economy that is set to grow up to 8% this year, and enjoys hefty demand for loans.

Outstanding loans across the banking system rose 20% in November from a year earlier, while monthly loan growth in 2014 was between 17% and 21% year-over-year.

In contrast, Japan's economy remains weak despite Prime Minister Shinzo Abe's efforts to revive it. Japan's gross domestic product increased at an annualized rate of 2.2% in the three months through December, government data showed Monday.

A Philippine law passed recently allowing foreign banks to own most of a local bank--as long as the acquirer's country allows the same privilege--has also heightened interest in domestic banks.

San Miguel bought its stake in Bank of Commerce in 2008 from the Conjuangco family, which holds the rest with private insurer College Assurance Plan. An effort in 2013 to sell the stake to Malaysia's CIMB Group Holdings Bhd. fell apart. A point of contention, one person with knowledge of the deal said, was that CIMB sought to buy the bank stake as well as the land the Philippine bank owned, but foreigners are barred from acquiring land in the country.

At the time, the stake was valued at around US$278 million, according to a person with knowledge of the transaction, but valuations in the country have surged since then.

The Philippine stock market was one of Asia's top performers last year, rising 23%, and is already up 7.7% this year alone.

Write to P.R. Venkat at venkat.pr@wsj.com, Atsuko Fukase at atsuko.fukase@wsj.com and Cris Larano at cris.larano@wsj.com

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