ANZ Banking Group Ltd is cited to be in preliminary takeover talks with funds manager IOOF Holdings.

IOOF Holdings is one of the last remaining independent players in the superannuation and financial advisory industry, and the rumoured discussions come as rapid consolidation is taking place in the wealth management sector.

The discussions between ANZ and IOOF are in a process; however, there is an uncertainty of a transaction eventuating, according to the newspaper.

The report speculates that the transaction could touch a $1.3 billion or more, and ANZ is cited to use a mix of cash and shares to pay for any deal.

The deal is expected to follow the AXA Asia Pacific's agreement to a $4.6 billion National Australia Bank Ltd-led takeover that involves a carve-up of AXA's Australian and Asian assets.

However, the bank has preferred to stay out of the emerging acrimony with NAB for AXA Asia Pacific's wealth assets, if ANZ are proceeding with talks with IOOF

Bankers have speculated that the deal will gain momentum in 2010, with activity witnessed dominated by financials, resources and consumer-driven sectors, and the Australian dollar's strength is likely to play a vital role.