UniCredito Italiano, Italy’s second largest bank by assets, has agreed to buy Germany’s HVB Group and its Eastern European units for 19.2 billion euros ($23.3 billion) in Europe’s biggest-ever cross-border banking takeover.

UniCredito offered five of its own shares for each share of Munich-based HVB, the two companies said in a statement yesterday. The offer values each HVB share at 20.48 euros, or 6.7% more than the closing price on May 25, before speculation about a takeover began. The Milan-based bank also offered 3.83 billion euros to buy out shareholders of HVB’s Austrian and Polish units.

The purchase will make UniCredito Europe’s eighth-largest bank by assets and the biggest in Central and Eastern Europe, where lending is growing almost three times faster than in the nations sharing the euro. In HVB, Uni-Credito is also buying a bank that had 5.7 billion euros of losses in the past three years, hurt by write downs on German real estate loans.

UniCredito “will have market leadership positions in parts of eastern Europe,” said Christian von Engelbrechten, who helps manage $4.9 billion at West-AM in Dusseldorf. Still, “HVB’s German business comes with it, and there I see a few structural problems that won’t be solved just by having a new owner.”

UniCredito, led by CEO Alessandro Profumo, will take a charge of about 1.35 billion euros in 2005 tied to the merger. The bank expects the purchase to yield annual net savings of 745 million euros as of 2008 and is aiming for a return on equity of 18% in 2007, the company said in the statement.

The purchase will be the biggest cross-border banking acquisition in Europe.