DG Bank, which owns the factoring company DG Diskonbank, is to merge with GZ Bank, it was agreed on Tuesday. The union will create the country's sixth largest bank with assets of E370bn ($340bn). The proposed deal comes a week after WGZ Bank, a third German co-operative, pulled out of three-way talks with DG Bank and GZ Bank saying that the negotiations had moved towards seeking a full merger rather than a looser form of co-operation. However, the two banks did not rule out WGZ Bank joining them at a later date. The merger process began last month after BVR, the German association of co-operative banks, called for moves towards consolidation in the country's overcrowded co-operative banking sector. At the end of last year, DG Bank dropping plans for a cross-border merger with Rabobank, the Dutch co-operative. Source: FT and BCR