UPDATE 2-AIG selling Argentine consumer unit for $44 mln

* Unit provides personal loans in Argentina

* Banco Galicia and a Grupo Pegasus group are buyers

* AIG shares off 1.8 pct (Adds terms of transaction)

NEW YORK, June 2 (Reuters) - American International Group Inc (AIG.N) said on Tuesday it agreed to sell its consumer finance operations in Argentina for nearly $44 million to Banco Galicia and an investment group led by Grupo Pegasus.

The business being sold consists of Compania Financiera Argentina (CFA), Cobranzas y Servicios and AIG Universal Processing Center.

AIG is in the midst of a massive restructuring as it tries to sell or spin off assets to raise money to pay back $85 billion borrowed from taxpayers. The U.S. government has committed up to $180 billion to rescue the insurance giant.

In a statement to the Buenos Aires Stock Exchange, CFA said Banco Galicia (GAL.BA) bought 80 percent of the company and the Pegasus investment group purchased the remaining 20 percent. CFA provides personal loans in Argentina and has about 1 million customers, AIG said.

Banco Galicia is the main unit of leading Argentine banking conglomerate Grupo Financiero Galicia (GFG.BA).

UBS acted as financial adviser and Kramer Levin Naftalis & Frankel served as legal counsel to AIG on the CFA transaction.

In January, sources had told Reuters that AIG was also selling its consumer finance businesses in Colombia and Mexico.

AIG shares were off 3 cents, or 1.8 percent, at $1.63 in morning trading on the New York Stock Exchange. (Reporting by Paritosh Bansal; additional reporting by Jorge Otaola and Damian Wroclavsky in Buenos Aires; editing by John Wallace) (For more M&A news and our DealZone blog, go to www.reuters.com/deals)