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Last Updated: Sunday, 20 May 2007, 18:09 GMT 19:09 UK
Italian deal creates bank giant
UniCredit's headquarters in Milan
Capitalia has been an attractive takeover target for some time
Italian bank Unicredit has bought its smaller rival Capitalia, creating Europe's second-largest bank by stock market value.

The all-share deal is worth 22bn euro ($29.7bn; 15bn), and keeps Capitalia in Italian hands.

"The transaction is a unique opportunity to consolidate two leading banking groups in a key core market," said Capitalia boss Matteo Arpe.

The combined bank will be worth more than 100bn euros.

Under the plan, Unicredit boss Alessandro Profumo will remain chief executive of the enlarged group, which will retain the Unicredit name.

The chief executive of Rome-based Capitalia, Matteo Arpe, resigned after the announcement.

The deal has been supported by the Italian government, with Prime Minister Romano Prodi calling it critical for the country's efforts to keep up with increasing globalisation.

The combined bank will have 9,200 branches worldwide, with more than 40 million customers.

HSBC is currently Europe's largest bank by market share.


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