Coventry Building Society has finalised the acquisition of The Co-operative Bank for £780m.

The deal is set to create a lender that will boast almost five million customers and an £89bn balance sheet.

The Coventry is the UK’s second largest building society by group assets, and it said that the acquisition would allow the newly-formed lender to increase its share of the mortgage market.

The Co-operative Bank, which has 2.5 million retail customers and 94,000 small business customers, will become a subsidiary of the Coventry.

In a statement, The Co-operative Bank said the deal would provide a diversified funding base to “continue to offer strong member value” and enhance investment to deliver service across branches, online and telephone and mobile services.

Under the deal, the Coventry said it does not need to seek a member vote for the deal under the Building Societies Act 1986.

Furthermore, The Co-operative will receive up to £125m three years after the deal has completed, subject to future performance.

Chief executive officer of Coventry Building Society, Steve Hughes said: "By bringing together Coventry Building Society and The Co-operative Bank we will be able to deliver more value to more people in the coming years. I am excited about the opportunities that lie ahead, most importantly, our ability to sustain the great value and outstanding service that matters most to our members."

Chief executive officer of The Co-operative Bank Holdings, Nick Slape, added: "I am proud of what has been achieved in recent years. We have successfully transformed and simplified the Bank into one that is now sustainably profitable with a strong capital and liquidity position. This transaction is a natural next step and presents an exciting opportunity."

The deal is set to be completed in the first quarter of 2025 and the brands will continue to operate under their current names.

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