The supervisory board of Germany's second largest bank, HypoVereinsbank (HVB), agreed on Sunday to merge with Italy's Unicredito bank. Under the deal, which would be the largest cross-border banking acquisition in Europe, Unicredito has offered 15 billion euros (18 billion US dollars) in shares for the German bank in an agreement reached between representatives of the two banks, sources said.

The HVB supervisory board also recommended that shareholders agree to the bid after hours of discussion.

According to the agreement, five out of the 11 Unicredito members of the merged bank's board would be from HVB, whose representatives would also take important positions. HVB chief Dieter Rampl would be president of Unicredito's supervisory board.

Unicredito, Italy's most profitable bank with a 2004 net profit of 2.13 billion euros, has offered to swap five of its shares for each HVB share. Based on trading late Friday, the HVB would be valued at about 20.50 euros per share, totaling about 15.1 billion euros.

The new bank will have about 127,000 employees, but analysts believe that around 10,000 of them will be jobless following the merger, reports said.

The merger would create the fourth largest bank in the euro zone and the ninth biggest in Europe as a whole if the deal is done.

The acquisition, expected to result in cost savings of about 900 million euros per year, is the price HVB pays for the long real estate crisis in Germany and the previous merger that led to the bank's creation in 1998.

The HVB was established seven years ago when Bayerische Vereinsbank merged with Hypo-Bank, which specialized in real estate loans especially in the east of Germany that went into default.

Source: Xinhua