Germany-based DZ Bank and WGZ Bank have signed a letter of intent to integrate their entire businesses into a new business unit, under the name of DZ Privatbank.

The businesses that will be part of the integration include supplementary segments such as Fund Services and Foreign Currency Lending.

The combined business unit DZ Privatbank is expected to have a total assets of €17bn having locations in Germany, Luxembourg, Switzerland and Singapore with nearly 1,000 employees.

As per the letter of intent, the new business unit will be created by merging the Luxembourg-based units of DZ Bank and WGZ Bank as well as DZ Privatbank (Schweiz).

In addition, WGZ Bank’s private banking operations will be incorporated in the new business unit in the course of 2011.

The new business unit will operate in the private banking segment as a partner of the local banks under the cooperative brand VR-PrivateBanking.

The new business will be responsible for the entire combined private banking operations of DZ Bank and WGZ Bank and will run as a joint, subsidiary cooperative specialized service provider on a par with Union Investment, R+V and Bausparkasse Schwabisch Hall.

The future management of the new unit will be made up of managers from the two banks. CEO will be Stefan Schwab, who already manages the activities of DZ PB – holding company of DZ Privatbank Group in Luxembourg. His deputies will be Bernhard Fruh and Andreas Neugebauer.

An advisory council that comprises of both bank representatives, will ensure the early and close involvement of the local cooperative banks in the new unit’s business strategy and policy.

WGZ Bank CEO Werner Bohnke said that by merging private banking activities, DZ Bank and WGZ Bank jointly with the local cooperative banks will further improve the opportunities in this business segment for the Cooperative Financial Services Network as a whole.