Updated from 7:45 a.m.

Germany's

Deutsche Bank

and

Dresdner Bank

said Thursday that they would come together in a "merger of equals" that would form one of the world's largest financial institutions in assets and speed the rate of consolidation among Europe's banks.

Based on Wednesday's closing share prices, the merger would be worth about 86 million euros ($82.63 billion) in market capitalization with total assets of around $1.3 trillion. The companies, though, haven't announced the value of the transaction. For comparison

Citigroup's

(C) - Get Report

market capitalization is roughly $170 billion.

Actually, Deutsche Bank will pay about $29 billion in stock to acquire its German neighbor, despite the diplomatic "merger of equals" notion.

The companies said the merger would cost them $2.8 billion in restructuring and force 16,000 employees from their jobs for about $2.9 billion in cost savings by 2003.

Under the terms of the deal, both companies will trade shares of their own stock for those of the new entity, to be called

Deutsche Bank AG

. Although the companies are calling it a merger of equals, Germany's largest financial institution, Deutsche Bank, will be the dominant partner with between 60% and 64% of the new shares while Dresdner, the third-largest German bank, will receive 36% to 40%, according to a statement from the companies.

Deutsche Bank Chairman Dr. Rolf-Ernst Breuer and Dresdner Bank Chairman Bernhard Walter will be co-chief executives of the new bank.

"The two banks are an optimal match in terms of their business and strategic focus," Walter said in a statement. "Together we will be the market leader with private and corporate clients, as well as the leading European investment bank."

Even as the German duo are on stage with their own announcement, a second act between a British and German bank is already being plotted, according to a German newspaper. In London,

HSBC

is planning to make a hostile bid for Germany's

Commerzbank

, a precedent set by British wireless company

Vodafone Airtouch's

(VOD) - Get Report

hostile prolonged takeover of Germany's

Mannesmann

(MNNSY)

.