Two of the oldest names in the City look set to come together after fund management group Schroders said it is considering a takeover of its smaller rival Cazenove Capital.
The deal could mean huge windfalls for current and former staff involved when it demerged from JPMorgan Cazenove in 2005. Schroders manages £212bn of funds and Cazenove £18.7bn.
Schroders recently lost a key funds team, led by Richard Buxton, to Old Mutual.
Analysts believe the company may have to pay up to £600m for the deal.
Cazenove's most comparable rival, Rathbones is valued at around 3 per cent of its assets under management, while peers like Jupiter Fund Management trade at about 5 per cent of assets.
"Schroders certainly needs to do something given the loss of Richard Buxton and other fund managers. Clearly they will need a high-quality UK franchise," said Numis analyst David McCann.
Cazenove, established in 1823, grew to become one of the top stockbrokers for the well heeled of London by the 1940s and reportedly counts Queen Elizabeth II among its clients.
Last month Schroders said its assets had risen to £212bn following strong inflows during the fourth quarter.