URGENT-Santander Totta eyes Portuguese commercial assets of BBVA

LISBON, June 17 (Reuters) - Santander Totta, the Portuguese offshoot of Spain's Santander,is eyeing the local commercial loan books of Barclays (LSE: BARC.L - news) and BBVA (Amsterdam: BBV.AS - news) , chief executive Antonio Vieira Monteiro told Reuters on Tuesday.

"We are studying ... the commercial portfolio, the retail network we are not interested in," Monteiro told Reuters, referring to BBVA's Portuguese unit. "We are looking and in the end we'll see if we are doing a proposal or not."

Monteiro would not say when he would take a decision on any bid but said his bank is interested in the similar assets held by Barclays, which is shrinking its European operations to concentrated on its core UK business. Barclays and BBVA both declined to comment.

Santander Totta is the third largest privately-owned bank in Portugal by assets.

Monteiro also said Santander Totta will take some of the 400 billion euros ($544.60 billion) the European Central Bank has set aside for a four-year low-cost funding scheme to encourage banks to lend to the real economy.

"I don't know (how much), I will take what I need," he said. "I will do the additional lending, yes, but what I am not doing is additional lending to bad companies, this is out of the question."

Monteiro hopes to grow Santander Totta's return on equity to 12 to 16 percent by 2016, from last year's 5.1 percent, as earnings rise to 400 million euros from last year's 102 million euros.

This year's figures will be helped by the release of a "lot of" the provisions the bank has already set aside for loan losses, since it had received more money back from struggling customers than expected, Monteiro said. ($1 = 0.7345 Euros) (Reporting By Laura Noonan, additional reporting by Steve Slater in London)