Lehman Brothers, Inc. and Kuhn, Loeb & Co., two of Wall Street's oldest and most venerable investment banking names, today, announced intentions to merge, continuing the consolidation wave that is engulfing the securities business.

The new firm will be called Lehman Brothers Kuhn Loeb, Inc., and will be capitalized at more than $70 million. It will be headed by Peter G. Peterson, now chairman of Lehman Brothers and formerly a commerce secretary in the first Nixon administration.

The international operations of the combined firm, however, will be conducted under the name of Kuhn Loeb Lehman Brothers International, a nod to Kuhn Loeb's preeminence in underwritings for foreign businesses and governments.

"On both sides we see this not simply as a merger of two fine names, but as a marriage of two profitable firms that complement one another to a remarkable degree," Peterson and Kuhn Loeb chairman John M. Schiff said in a joint statement.

Kuhn Loeb, which was founded in 1867 and which earned a reputation as an investment banking firm second in power only to the House of J.P. Morgan, has slipped in relative size and influence in recent years and has been the subject of numerous merger rumors over the last year.

It has been primarly a family-controlled firm, resulting from the inter-marriage of several prominent German-Jewish merchant banking families in the 19th Century - the Loebs, Kuhn's and Schiffs. The Schiff family continues to hold a substantial share of the firm's nearly $20 million in capital, and supposedly none of this will be withdrawn when the merger takes place.

John Schiff, 73, grandson of legendary financier Jacob Schiff, who a century ago was spearheading the financing of the U.S. railroad industry, will continue as henorary chairman of the board of the combined firm. His son, David T. Schiff, now a vice chairman of Kuhn Loeb, will be a member of the board of the new firm.

Earlier this year Kuhn Loeb reorganized from a partnership into a corporation, bringing in Harvey M. Krueger will have overall responsibility for the new firm's banking activities and will be chairman of the banking policy committee.

Reflecting Lehman Brothers' expertise in stock trading and money market activities, Lewis L. Glucksman and Robert S. Rubin of Lehman will have overall responsibility for the merged entity's equity and fixed income areas.

Lehman Brothers is even older than Kuhn Loeb. Founded in 1850, it also remained essentially a family-controlled firm for most of its years and thrived as an elite partnership with contacts at the highest levels of business and government both here and in Europe. Robert Lehman, a scion of the founder, headed the firm until his death in 1969.

Peterson, who had been an executive with Bell and Howell before his stint as commerce secretary, was brought in 1973 and has largely succeeded in reviving the firm's flagging fortunes that had moved into the red. Last year Peterson pushed through a significant reorganization that swept out seven of Lehman's senior partners in favor of younger men.

The Banea Commerciale Italiana, which has been an important investor in Lehman Brothers, will continue as a major shareholder in the new enterprise, it was also announced.

The two firms said they plan to sign a definitive contract of merger shortly, with the final closing expected Dec. 16.

Krueger said the merger "is not a question of necessity - it's a question of enthusiastic desire." He called it "a marriage of firms with the same philosophy." The two firms together have about 400 investment banking clients and will rank about fifth in managed negotiated underwritings, according to Krueger.

David G. Sacks, senior administrative officer of Lehman Brothers, said merger talk commenced about three weeks ago when Lehman made a call after reading that Kuhn Loeb was holding talks with Shearson Hayden Stone, Inc.

"We said, "Wouldn't Lehman make more sense?" Sacks recalled. He said the talks got serious two weeks ago, almost blew up last Tuesday, but intensive negotiations resumed on Thanksgiving morning and culminated Sunday evening with an agreement.

As for the reason for the merger, Sacks said that "in securities market today one cannot be overcapitalized and one cannot be overcapitalized and one cannot be too strong."

The merger proposal follows recent similar announcements by the Dean Witter organization and Reynolds Securities and by Hornblower, Noyes Weeks & Trask and Loeb Rhoades. Meanwhile, the merger rumors are continuous.