Germany's largest bank, Deutsche Bank, has formally announced it is to takeover New York-based Bankers Trust in a deal that is worth US$10 billion.
Combined the group will be the largest bank in the world by assets, the third largest fund manager and fourth ranked in the custodian business.
Deutsche said in a statement on Monday morning (US time) that the supervisory boards of both banks had approved a definitive agreement under which Deutsche would buy all outstanding shares of the common stock of Bankers Trust at US$93 a share.
The deal is expected to be closed next year.
Downunder, the merger of BT and Deutsche Bank subsidiary Morgan Grenfell will create the biggest funds management business in Australia.
The impact of the deal in New Zealand is minimal in some senses, as Deutsche has only a small presence in the investment banking scene, while BT is one of the leading fund managers. However, it is anticipated there will be positive spinoffs for BT New Zealand.
Speculation in Australia is that while BT Funds Management hopes to be kept as a stand-alone independent manager that isn't likely to happen.
Instead BT and Morgan Grenfell are likely to be integrated and management of international equities may move to London, where Morgan Grenfell conducts all its international investment business.
Such a move would likely result in a number of managers being made redundant.
Also under the spotlight will be the investment styles used by both managers. While BT likes to take big stakes in companies it expects to do well, Morgan Grenfell opts for a strategy that puts more emphasis on producing consistent returns and on reducing risks.
However, Deutsche is likely to want to keep the very strong BT brand name in both the Australian and New Zealand markets.
In the past week top BT Australia executives, including managing director Rob Ferguson, head of funds management Ian Martin and investment bank chief Gavin Walker have been in New York and London meeting with high-level Deutsche executives.
Germany's largest bank, Deutsche Bank, has formally announced it is to takeover New York-based Bankers Trust in a deal that is worth US$10 billion.