Coventry Building Society has agreed a potential takeover of the Co-operative Bank for £780million.

The merger would see Co-operative regain its mutual status and create a group with a balance sheet of around £89billion.

Co-op Bank currently has around 2.6m customers and Coventry around 2m.

A stock market statement says the talks are at an advanced stage and due diligence has been carried out, however, it is still dependent on both sides agreeing to terms and on regulatory approval.

Coventry Building Society says its board has looked into whether it would need to get its members’ approval ahead of the merger and determined that a vote is not required.

It comes after Co-operative last month announced plans to cut 400 jobs.

Coventry chief executive Steve Hughes says: “This is an exciting moment for the Society.

“We have a very successful history and we believe this could be the basis of a very successful future – with members, great value and a great service at its heart.

“The Co-Operative Bank is a financially stable, profitable organisation with a shared heritage and products and services that complement our own.”