Italy's UniCredito and Germany's HVB have agreed Europe's biggest cross-border banking takeover in a deal worth nearly €20 billion.
'We are creating the first truly European bank,' HVB chief executive Dieter Rampl said on Sunday after his bank's supervisory board approved the deal to form Europe's ninth-biggest bank.
In Milan, UniCredito chief Alessandro Profumo confirmed the board of the Italian lender had also agreed to the takeover that will fuse the two banks' big investments in central Europe and in their domestic markets.
UniCredito will offer five new shares for each one in HVB, valuing the German bank at €15.4 billion, plus either shares or cash for stock in Bank Austria Creditanstalt and BPH in Poland, both of which are units of HVB.
The takeover, if completed, would be bigger than last year's acquisition by Spain's Santander Central Hispano of Abbey National in Britain.
As well HVB's central European assets, UniCredito stands to gain its retail network in Bavaria and northern Germany, a corporate and property loan book and fund arm Activest.
HVB has set aside €5.7 billion for bad loans in the past three years alone, and some investors still believe more unpleasant surprises are in store.
