LONDON (MarketWatch) -- Swedish bank SEB /zigman2/quotes/201173722/delayed SE:SEB.A -1.34% said Monday that it is selling its German retail banking business to Spain's Santander /zigman2/quotes/205677933/delayed ES:SAN -0.70% for 555 million euros ($699 million) in a deal that will strengthen its return on equity and boost its core capital ratio by half a percentage point. SEB said the deal includes 173 branches, 2,000 employees and around 1 million private customers. The group added it will continue to operate in Germany, focusing on merchant banking and wealth management. SEB said allocated equity at the unit is 420 million euros, but that transaction costs, including related funding and hedge accounting effects will be around 375 million euros, resulting in a net negative financial impact of around 240 million euros. Restructuring costs for the remaining German business will be around 80 million euros.