British banking major Barclays has agreed to sell its Italian retail banking operations to CheBanca!, part of the Mediobanca group.

Under the deal, CheBanca! will acquire 89 branches, comprising 220,000 clients, residential mortgage loans worth EUR2.9bn, and 620 staff.

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The transaction is expected to increase CheBanca! clients by 40% to 770,000, the Italian bank said in a statement.

CheBanca! CEO GianLuca Sichel said: "With this deal we wanted to provide some strong impetus to the CheBanca! growth plan. Acquisition of Barclays’ Italian retail activities will enable us to significantly enhance our client base while maintaining high quality levels, and to strengthen our capabilities and multi-channel business model which is unique on the market in terms of innovation and accessibility."

The deal will see Barclays paying EUR237m to CheBanca! to help refinance the loss-making Italian business.

Barclays said that the transaction will lead to a loss after tax of about £200m that will be booked in the fourth quarter of 2015.

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Barclays group CEO Jes Staley said: "This transaction is further evidence of the re-shaping of Barclays Group to focus on our Core businesses. We continue to make progress in the reduction of Barclays Non-Core as we target risk weighted assets of around £20bn at the end of 2017."

The deal, subject to regulatory approval, is scheduled to close in the second quarter of 2016.

The British banking major also said that it would continue to operate its investment and corporate banking businesses in Italy, as well as manage the remaining retail mortgage portfolio.