Merger to make DZ Bank Germany's third biggest lender

German cooperative lenders DZ Bank and WGZ Bank said Thursday they plan a merger next year that would create the country's third biggest financial institution.

The new bank would launch next August 1 under the name DZ, with total assets of nearly 500 billion euros ($535 billion), they said after signing a letter of intent.

This would make it Germany's third biggest lender after the far bigger Deutsche Bank and Commerzbank, placing DZ ahead of public development bank KfW.

Frankfurt-based DZ Bank is the lead institution of about 900 cooperative banks across most of Germany. The smaller WGZ based in Duesseldorf has subsidiaries in North Rhine-Westphalia and Rhineland-Palatinate states.

The merger would be Germany's biggest banking sector deal since 2010, when Deutsche Bank swallowed Postbank, before they parted ways this year.

DZ and WGZ had previously attempted to merge, most recently planning for a 2009 fusion, a plan that was derailed by the financial crisis.