Spanish bank Santander has agreed to sell a portfolio of bad loans worth €1.1 billion ($1.21 billion) gross to U.S. private equity fund Cerberus and real estate loan manager Axactor, Expansion reported Friday.

The loan portfolio, dubbed "project Spirit," includes personal loans, some mortgages and loans to medium and small businesses, said Expansión, which based its information on unidentified financial sources.

Expansión did not mention the price or possible discount on the portfolio sale, but said the transaction is divided into two tranches.

The first loan portfolio, worth about €660 million, was sold to Gescobro, a Spanish subsidiary of Cerberus, and the second, worth about €440 million, to Axactor, the newspaper said.

Santander declined to comment, while Cerberus and Axactor did not immediately respond to a request for comment.

Spanish banks have been very active in the past in disposing of real estate assets, which went bad in the economic downturn that followed the bursting of the Spanish housing bubble in late 2007.

Now banks are selectively repackaging loans in an attempt to recover some of the cash that could be impaired in the wake of the economic slowdown and the COVID-19 pandemic.

Spanish banks' NPLs were still hovering around record lows of 3.55% in February, well below the all-time high of 13.6% reached in December 2013.

(1 dollar = 0.9056 euros)

(Reporting by Jesús Aguado; editing by Inti Landauro and Jan Harvey; Spanish edition by Flora Gómez)