* CheBanca! to take 89 branches, 620 staff, 2.9 bln euroloans
* Barclays to book 200 mln pound loss in Q4
* Barclays could have over 14 bln euro of Italy loans tosell
* Mediobanca shares up 1.5 pct, Barclays up 0.7 pct (Adds comments from CEO of CheBanca!)
By Silvia Aloisi and Simon Jessop
MILAN/LONDON, Dec 3 (Reuters) - Barclays is paying237 million euros to sell its branches in Italy to Mediobanca in a deal that will give the Italian investment bank aboost in a race for asset management fees on its home turf.
Mediobanca said on Thursday its retail division CheBanca!would buy from Barclays 89 branches with 220,000 clients,residential mortgage loans worth 2.9 billion euros ($3.1billion) and some 550 staff. Reuters reported on Wednesday thedeal was imminent.
The sale is part of plans by Britain's third biggest bank toshed continental European retail banking operations as itretreats from businesses that are unprofitable or lack scale.Barclays said it would book a 200 million pound ($298.5 million)loss on the transaction in the fourth quarter.
Milan-based Mediobanca has been seeking to diversify fromits core investment-banking business and expand in more stable,less capital-intensive activities at a time when regulators areimposing stricter requirements.
With the Barclays deal, CheBanca!, founded in 2008 andfocused on digital-savvy customers with between 50,000 and200,000 euros, will nearly triple its number of branches and itsclient numbers will grow by 60 percent to 770,000.
Total assets under management will double to more than 6billion euros. The transaction coincides with a move by Italianbanks to draw more on the private household cash to make moneyand offset weak retail operations.
"This operation immediately gives us the scale in assetmanagement that we needed and allows us to take a leap forward,"CheBanca! CEO Gian Luca Sichel told Reuters.
He described the 237 million euros CheBanca! is getting fromBarclays as a "dowry" for restructuring and revamping thenetwork, which he said breaks even.
He did not rule out that some branches could be closed in acountry where most banks have been cutting their branch networksto reduce costs and are expected to continue to do so.
Barclays for its part is likely to be left with more than 10billion pounds, or 14 billion euros, of Italian mortgages on itsbooks, which it is trying to sell. It had 13.5 billion pounds ofItalian residential mortgages at the start of the year.
The bank has already sold retail operations in Spain andPortugal and is seeking to sell in France.
Other banks which want to reduce their retail presence inItaly include Deutsche Bank, sources with directknowledge of the matter said. Deutsche Bank has said any rumoursabout a withdrawal from the euro zone's third largest economyare unfounded.
The Italian sale will reduce Barclays' risk-weighted assetsby about 800 million pounds and result in a small decrease inits capital ratio.
The deal will have a 20-basis point negative impact onMediobanca's capital, or around 120 million euros according toanalysts, but will boost profit from the 2016-17 financial year.
Barclays said it would continue to operate investmentbanking and corporate banking services in Italy, and continue tomanage its remaining retail mortgage portfolio. It is attemptingto parcel those loans up and sell them to investors, includingprivate equity firms.
($1 = 0.9448 euros)
($1 = 0.6695 pounds)
(Additional reporting by Steve Slater, Paola Arosio; Editing byMark Potter and Jane Merriman)
Barclays (BARC)