The two groups have been in discussions over a possible merger for several months.
Coventry Building Society has agreed a potential takeover of rival high street lender The Co-operative Bank for up to £780 million, the companies have announced.
The two groups have been in discussions over a possible merger for several months.
A deal would create a combined group with a balance sheet of £89 billion, making it a bigger player in the mortgages and savings market.
Coventry said it would look to integrate Co-op Bank gradually over several years, with the bank’s customers eventually becoming members of the building society.
The lenders said they were working together to firm up the arrangements of the deal and stressed there can be no certainty that an acquisition will happen.
The chief executive of Coventry Building Society, Steve Hughes, said it is an “exciting moment” for the group, adding: “The Co-operative Bank is a financially stable, profitable organisation with a shared heritage and products and services that complement our own.
“We’re confident that we have the people, capability and the financial strength to bring both organisations together successfully over a number of years.”
