French bank BNP-Paribas announced Tuesday that Italy's central bank had approved a takeover bid by the French bank for Italy's sixth largest bank BNL for 9 billion euros (10.9 billion dollars).

BNP-Paribas needed approval from the Bank of Italy, or Italy's central bank, to proceed with its plans to acquire 48 percent of the capital of Italy's Banca Nazionale del Lavoro (BNL), from the 13 shareholders who agreed to sell their stakes in February.

"This acquisition is still subject to approval from the other regulatory authorities," BNP-Paribas said.

Once that operation is done, BNP-Paribas will buy the whole of BNL for 9 billion euros with a public offering at 2.92 euros per share.

The takeover bid, expected to be completed by mid-2006, would be one of the biggest mergers ever seen in the European banking sector.

BNP-Paribas said in early February that economies of scale from the deal would total 400 million euros annually for three years.

But analysts said the deal would dilute the share price in the short term, as BNP-Paribas must come up with a 5.5-billion-euro capital increase as part of the deal.

Source: Xinhua