Bank of New York snaps up Mellon

The deal is subject to regulatory and shareholder approval

The Bank of New York has agreed to buy Mellon Financial Corporation for $16.5bn (£8.3bn).

The merger will create the world's largest securities servicing and asset management company, called The Bank of New York Mellon Corporation.

The banks said the combined company would have a market capitalisation of $43bn, becoming the 11th largest U.S. financial institution.

The deal is expected to be complete in the third quarter of 2007.

Bank of New York boss Thomas Renyi will be executive chairman for 18 months after the deal closes and will have overall responsibility for the integration of the two firms.

Mellon chief Robert Kelly will be chief executive of the company and succeed Mr Renyi as chairman.

For each of their current shares, Bank of New York shareholders will get 0.943 shares in the new company.

Mellon stockholders will get one share in the new firm for each of their shares.

About 3,900 job cuts are expected.