BERLIN (AP) - Germany’s HVB Group on Sunday accepted a euro15.4 billion (US$18.7 billion) takeover from Unicredito SpA of Italy, opening the way for Europe’s biggest ever cross-border banking deal and the creation of a dominant player in the former communist east. "The management board and the supervisory board of HypoVereinsbank approved the business combination,” HVB said in a statement after a meeting of the company’s executives in Munich

. The banks said Unicredito, Italy’s largest bank, offered five of its shares for each HVB share, valuing the deal at euro15.4 billion. It said it would also offer cash or stock for outstanding shares in HVB’s Austrian and Polish units. Unicredito said its board backed the offer at a meeting in Milan. However, shareholders in both companies as well as regulators must still give their approval. The agreement is a triumph for Unicredito chief executive Alessandro Profumo, who is to run the combined bank from Italy’s financial capital, Milan. Under his leadership, Unicredito has emerged as a force with the combination of seven Italian institutions, most of them regional savings banks, in 1998 and 1999. It has since carried out a string of acquisitions in countries such as Poland, Slovakiaand Romania, and also built up its asset-management arm with the acquisition of U.S.fund manger Pioneer in 2000. It moved for HVB, Germany’s No. 2 lender, as it struggled to cut costs at its domestic business after property writedowns last year pushed it to a net loss of euro2.3 billion. Unicredito, which is currently headquartered in Genoa, earned euro2.1 billion in 2004. "We will become the first truly European bank,” Profumo said in a statement which promised investors "compelling” growth in profits. Acquiring HVB would give Unicredito a major foothold in Germany, the continent’s largest economy, and neighboring Austria- wealthy areas adjoining its prosperous north Italian heartland. HVB had also pushed aggressively into eastern Europe, and the combination could face tough examination from regulators in countries such as Polandwhere it will dwarf competitors. However, the deal would be a further blow to the prestige of Germany’s once-mighty financial industry. Banks such as Deutsche Bank AG have shelved once ambitious expansion plans to concentrate on painful restructuring at home to shore up earnings.  Analysts expect more consolidation, including further foreign takeovers. Shares in Commerzbank AG, itself tipped as a partner for Unicredito as far back as 2001, have risen in recent weeks following renewed peculation that it could be a target for rivals in Franceor Britain. It could even darken the hopes of Chancellor Gerhard Schroeder, under fire over stubbornly high unemployment, in expected fall elections if it leads to redundancies among HVB’s 26,000 German employees - almost half its total work force. A statement from Unicredito made no mention of job cuts, but forecast savings of about euro900 million (US$1.1 billion) by 2008 from merging overlapping units. While its retail, corporate and asset management business would be based in Milan, the investment banking division would go to Munich. Viennawould be the headquarters for its central and eastern European business. HVB chief Dieter Rampl, who would be chairman of the enlarged group, said it had found "the best partner” for both its shareholders and employees.Unicredito said it would list its shares in Frankfurt and Warsaw as well as Milan.