The shareholders of Italian banking giants UniCredito Italiano and Capitalia have approved the proposed merger of Capitalia into Unicredito Italiano, to create a European banking behemoth, which Reuters reported will be worth E80 billion.

As part of the all-share takeover deal, Unicredit will offer an exchange ratio of 1.12 of its new ordinary shares for each Capitalia ordinary share, which according to Reuters, would value the deal to be worth E18 billion at current market prices.

The Associated Press revealed that the deal, which had been agreed in May 2007, was approved by almost 90% of Capitalia’s participating shareholders and 99.86% of Unicredit’s shareholders.

Following completion of the merger, the combined entity will be the second largest banking group in Europe, and the number one lender in Italy, Reuters reported.

The proposed merger is still subject to regulatory approval and is expected to operational by the beginning of the fourth quarter of 2007.