Spanish banking major Santander has signed an agreement to divest its retail and commercial banking operations in Puerto Rico to FirstBank Puerto Rico in a deal worth around $1.1bn.

Banco Santander Puerto Rico’s staff strength is 1,000. The company has $6.2bn in assets and 27 branches, which will be transferred to Santander.

The takeover of Banco Santander Puerto Rico, said to be the fourth largest banking group in the country, will enable FirstBank to expand its footprint to become the second largest branch network in Puerto Rico. The merged entity will have over $17bn in assets.

Meanwhile, Santander will retain its presence in Puerto Rico, through Santander Consumer USA, and a retained loan portfolio with a net worth of $220m.

Commenting on the deal, Santander Holdings USA CEO Scott Powell said: “We are pleased to reach this agreement with FirstBank Puerto Rico. FirstBank Puerto Rico shares our values and our commitment to customers, and the local communities.

“Once completed, the transaction will provide the combined FirstBank Puerto Rico and Santander Bancorp Puerto Rico the ability to offer a broad array of retail and business banking products and services, with the scale to compete through an enhanced branch network to the benefit of both banks’ current and future customers.”

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The deal is pending regulatory nod, with completion expected by the middle of next year.