The Britannia Building Society is set to merge with Co-operative Financial Services (CFS). The merger will create a business worth £70 billion in assets with nine million customers and over 12,000 employees in more than 300 branches.

The combined group will be a wholly owned subsidiary of The Co-operative Group and Britannia members are to become Co-op members.

The two organisations have said that if some of the branches are too near to each other they may have to close, however, they have pledged that there will be no compulsory redundancies.

The merger will only be approved if a new legislation allowing mergers between mutuals is granted in March. The merger also has to be approved by its members.

CFS chief executive, David Anderson, hopes the merger will attract many thousands of new customers.

Both groups said the new business will be strongly capitalised and as at 31 December 2008, had a Tier 1 ratio of 9.8%.