The merged business will operate under the Rathbones name and is valued at £839m, according to the firms.

The merger was announced to the Stock Exchange this morning.

The boards of Investec and Rathbones Group have signed an agreement for the all-share combination of Investec Wealth & Investment Limited and Rathbones.

The companies say the move will create one of the UK’s largest discretionary wealth manager.

Expanding its Financial Planning presence will be one of the key aims for the merged business, it says.

The merged company says the deal will also, “enhance the client proposition across banking and wealth management services for both groups.”

The deal will require approval from the FCA, the Competition and Markets Authority and other regulators.

Under the terms of the deal, Rathbones will issue new Rathbones shares in exchange for 100% of Investec W&I UK's share capital.

The enlarged Rathbones Group will remain an independent, listed company operating under the Rathbones brand with Investec Group as a long-term, strategic shareholder.

On completion, Investec Group will own 41.25% of the economic interest in the enlarged group's share capital, with Investec Group's voting rights limited to 29.9%.

According to the firms, the deal implies an equity value for the merged business of approximately £839m.

The deal includes Investec Group's wealth and investment businesses in the UK and Channel Islands but excludes Investec Bank (Switzerland) AG (IBSAG) and Investec Wealth & Investment International (Pty) Ltd (Investec W&I SA). Both IBSAG and Investec W&I SA will remain wholly-owned subsidiaries of the Investec Group.

Rathbones and Investec say the key aims of the deal include:

· enhancing the client proposition in investment management, Financial Planning, fund management and banking services

· creating a multi-channel distribution capability across private clients, intermediaries and charities, through an expanded network of 23 locations in the UK and Channel Islands

· leveraging Rathbones' investment in technology and operating model to deliver an optimal client experience while improving operating efficiency across the larger combined business

· delivering significant value creation through “target annual run-rate cash synergies” of at least £60 million, driven primarily by cost savings as well as higher net interest income

· establishing a long-term, strategic partnership between the enlarged Rathbones Group and Investec Group to leverage attractive collaboration opportunities.

The merged group’s London office will operate from the same building as Investec Group at 30 Gresham Street.

Rathbones chair Clive Bannister said: "Bringing Rathbones together with Investec W&I UK will create the UK's leading discretionary wealth manager with approximately £100 billion of funds under management and administration. This transaction not only presents a compelling strategic and financial rationale, but also accelerates Rathbones' growth strategy.

“Operating at scale allows the group to offer an even more attractive proposition to clients and colleagues, supporting future growth and creating significant value for Rathbones' shareholders. I look forward to Investec W&I UK colleagues joining the Enlarged Rathbones Group, and welcome Investec Group as a strategic shareholder. I am hugely excited about what the combination can deliver."

Fani Titi, Investec group chief executive, said: "The combination of Investec W&I UK and Rathbones brings together two businesses which have a long-standing heritage in UK wealth management and closely aligned cultures. The strategic fit of the two businesses is compelling with complementary strengths and capabilities to enhance the overall proposition for clients.

“This will be supported by the strategic partnership which offers attractive growth and collaboration opportunities for both groups. The transaction represents a real step-change and long-term opportunity for our UK wealth strategy, underscores our commitment to the UK wealth management market and enhances our UK business as a whole."

Iain Hooley, chief executive (subject to regulatory approval) of Investec W&I UK, said: "We are excited to be combining with Rathbones, a business with a similar heritage, common vision and a shared culture. As a combined business, we will have true scale, an enhanced client proposition, and complementary multi-channel distribution capability.

“The long-term, structural growth opportunity in the UK wealth industry is compelling and together we will be well placed to capitalise on it. We look forward to working with the Rathbones management team to complete the transaction and bring the two organisations together."

Rathbones has been steadily expanding its Financial Planning arm and in 2021 bought Financial Planner Saunderson House for £150m. At the time Saunderson House had £4.7bn in Funds Under Management or Advice, 2,200 clients and 55 financial advisers. Clients' average portfolio size was £2.2m. The acquisition of Saunderson House increased the number of in-house Financial Planners at Rathbones from 25 to 80.

Investec Wealth has also been increasing its Financial Planning exposure and in July last year acquired Edinburgh wealth manager and Financial Planner Murray Asset Management for an undisclosed sum. Murray Asset Management’s 20 staff transferred to Investec Wealth & Investment.