UniCredito of Italy last night secured Europe's biggest ever cross-border banking takeover with the acquisition of Germany's HVB in a €15.4 billion deal.

Sealed after day-long board meetings at both banks to approve the offer, the deal is the culmination of years of effort by Alessandro Profumo, UniCredito's chief executive, who will head the enlarged group.

The transaction vaults UniCredito into the top bracket of banks in the continent and puts it a long way ahead of any other Italian bank in terms of market capitalisation. The combined bank will be the ninth-largest in Europe and the fifth-largest financial services group in the euro zone.

The deal also challenges the view that barriers to cross-border bank consolidation in Europe make such deals almost impossible to pull off.

However, many bankers and analysts are sceptical about further mergers, partly because investors are perceived to be reluctant to accept the execution risk of large deals and partly because of a dearth of suitable matches.

The combined bank will have operations throughout Italy, Germany, Austria and eastern Europe, with more than 28 million customers, more than 7,000 branches and assets of €733 billion.

It will be a powerhouse in eastern Europe, and the biggest bank in Croatia, Bulgaria and Poland. However, it may have to sell some operations in Croatia, where it will have a 34 per cent market share, and in Bulgaria, where it will control 24 per cent of the market.

The two banks said the merger would deliver annual synergies of €985 million before tax, to be fully realised by 2008. The majority of the savings will come from proposed cost cuts. Bank insiders said 9,000-10,000 jobs would go, principally in eastern Europe.