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.
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Coventry Building Society said it would look to integrate Manchester-based Co-op Bank gradually over several years, with the latter'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 could be no certainty that an acquisition would happen.
Steve Hughes, chief executive officer of Coventry Building Society, said: "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.
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"The Co-operative Bank is a financially stable, profitable organisation with a shared heritage and products and services that complement our own.
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"Its customers, colleagues, branches, mortgages and savings balances, and the additional products and services it provides, will make us stronger and enable us to continue offering the value and service that matters to members and customers alike.
"We're confident that we have the people, capability and the financial strength to bring both organisations together successfully over a number of years."
The move would mean Co-op Bank would return to a mutual ownership structure which it had more than ten years ago when it was part of the wider Co-op Group, meaning it is owned by members rather than shareholders.
It parted ways with the group in 2017 when it fell into deep financial difficulty and was rescued by American hedge funds and is now owned by a group of private equity investors.
Co-op Bank has 50 branches across the 海角视频 with about 3,400 staff. Last month, it said it was planning to cut about 400 jobs across the bank as part of efforts to cut costs.