LONDON/MILAN (Reuters) - Barclays (>> Barclays PLC) is close to signing a deal to sell its Italian bank branches to CheBanca, Mediobanca's (>> Mediobanca Group) seven-year-old retail arm, two sources familiar with the matter said, with the deal expected to be announced as soon as Thursday.

Barclays and Mediobanca declined to comment.

The final details of the transaction were still being ironed out on Wednesday but the sources said Barclays has agreed to sell about 90 branches in Italy and will make a payment to Mediobanca as part of the agreement.

One of the sources said Barclays will pay less than 250 million euros (£177.32 million) to help refinance the business.

He also said that Mediobanca will pay a "symbolic amount" to Barclays.

The British bank has already reduced the Italian network to about 90 branches from 200 in 2010 and had 11.9 billion pounds of residential mortgages in Italy at the end of June, down from 13.5 billion pounds at the start of the year.

Barclays is running a parallel process to sell the mortgage portfolio, worth around 1 billion euros, one of the sources said, pointing to continuing negotiations with U.S. asset manager Fortress Investment Group (>> Fortress Investment Group LLC).

Reuters reported in October that Fortress had entered exclusive talks to buy the loans.

Barclays said last year it planned to sell its continental European retail banking operations and had put them in a non-core unit with other assets it intended to sell or run down.

Barclays has sold its retail banking operations in Spain and Portugal - but kept some activities, such as investment banking and credit cards - and is still looking to sell assets in France.

(Editing by Greg Mahlich)

By Pamela Barbaglia and Silvia Aloisi