MADRID Nov 13 Banco Sabadell said on Tuesday it had agreed in principle to buy Banco Mare Nostrum's branch network and business in two Spanish regions, increasing Sabadell's customer base by 900,000 people.
Sabadell, Spain's fifth largest lender, did not say how much it would pay to acquire BMN's assets and liabilities in the northern regions of Catalonia and Aragon, including 461 branches.
BMN was formed by the merger of four Spanish savings banks following the collapse of the country's housing boom.
"The deal would significantly expand Banco Sabadell's presence in its home territory and grow its retail business there, making it the fourth-largest bank in Catalonia," Sabadell said in a statement.
Sabadell will take on 11.1 billion euros ($14.1 billion)in customer loans and 8.8 billion euros in customer deposits. These numbers exclude the parts of BMN's business in those regions that will be transferred to Spain's "bad bank".
The bad bank, a condition for Spain to receive up to 100 billion euros in European aid for crippled lenders, will take up to 90 billion euros of toxic real estate assets out of the banking system.
Spain's decade-long housing boom fueled by cheap credit turned to bust five years ago. Writedowns on bad property investments almost wiped out third-quarter profit at the country's biggest lender Banco Santander.
An independent audit of Spanish banks found BMN had capital needs of 2 billion euros..
Sabadell said it would undertake due diligence and the two parties hoped to complete the deal by Dec. 31. ($1 = 0.7867 euros) (Reporting by Clare Kane; editing by Andrew Hay)