BRASILIA (Reuters) - Brazil's central bank said on Wednesday it has approved a planned merger between Itau (ITAU4.SA), one of the country's largest private banks, and its smaller rival Unibanco (UBBR11.SA).

The initiative contributes to the strength of the domestic financial system during the current difficulties on the international financial market, the central bank said in a statement.

When the deal was announced in November both sides said it would create Latin America's largest bank with assets of around 575.1 billion reais ($245 billion).

The proposed deal still requires a final go-ahead from the country's antitrust agency Cade. (Reporting by Daniela Machado; writing by Raymond Colitt; editing by Richard Chang) ( ; +5561 3426-7021; Reuters Messaging: