Spain's biggest bank agreed to purchase about $3.2 billion in auto loans from Citigroup Inc., expanding its U.S. consumer-lending business.

Santander Consumer USA, a unit of Banco Santander SA, will buy the loans from Citi's CitiFinancial Auto, Santander and Citi said Thursday. Santander and Citi also have entered into an agreement under which Santander will service a portfolio of about $7.2 billion of auto loans to be retained by Citi.

Santander is targeting growth in the U.S., which is expected to contribute 5% of group profit this year and as much as $1.15 billion in earnings by 2011, its chairman, Emilio Botin, has said.

Juan Inciarte, Santander's head of strategy, said Thursday in Madrid that it needed to "pay attention" to what happens in the "monster" markets of the U.S. and China.

CitiFinancial Auto is one of more than two dozen businesses that Citi's chief executive, Vikram Pandit, tagged for sale or eventual closure in January 2009 following the bank's $45 billion bailout in 2008.

At March 31, Citi's North American auto-lending business had $12.7 billion of loans outstanding, down from $18 billion a year earlier, according to its website. With Santander scheduled to buy or service $10.4 billion of the assets, Citi will have mostly exited the business. The sale will not have a material impact on Citi's net income, the banks said.

Santander bought Drive Financial, a subprime auto lender, in 2006. Last year Santander completed the purchase of Sovereign Bancorp, a 772-branch Philadelphia lender with about $72 billion of assets. Santander Consumer USA, in Dallas, has a serviced auto-loan portfolio of about $14.9 billion.

The bank is also trying to resurrect talks to combine Sovereign with M&T Bank Corp. after negotiations collapsed last month, according to three people with knowledge of the matter.

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