Wealth managers Rathbones and Smith & Williamson are in talks to agree a merger which will create a GBP55 billion wealth management firm.

Rathbones will effectively take over Smith & Williamson as the larger firm which manages GBP36 billion, against Smith & Williamson’s GBP19 billion. The deal values Rathbones at GBP1.4 billion and Smith &Williamson at GBP600 million.

Last month Rathbone posted a 16.7 per cent rise in first-half pre-tax profit to GBP26.6 million on the back of market gains and an increase in assets under management. The combined new company would see Rathbones, led by CEO Philip Howell (pictured), able to expand its offering, adding Smith & Williamson’s tax and accounting practice.

Behind the news, rumour has it that Canadian financial firm, AGF with CAD36 billion in assets and which owns 33 per cent of Smith & Williamson, has been looking for an exit from the firm. Both firms have large shareholdings held by their staff.