Coventry Building Society’s £780 million deal to take over the Co-operative Bank will go through in the new year after regulators gave it the green light.

The Co-op Bank will officially become a subsidiary of Coventry Building Society on January 1 2025, the lenders said on Thursday.

The tie-up, announced in May, will create a banking giant with millions of customers and about £89 billion worth of assets.

It will return Co-op Bank to a mutual structure, meaning it is owned by individual members rather than shareholders and investors like most UK banks.

Officials at the Financial Conduct Authority and the Prudential Regulation Authority, which regulates banks, have now approved the deal.

Co-op Bank was part of the wider Co-op Group more than 10 years ago, before splintering off when it fell into deep financial difficulty.

It was rescued by American hedge funds and is currently owned by a group of private equity investors.

Fully joining up the two businesses is set to take several years, and there will “inevitably be change over time”, the pair said when the deal was agreed.

Both brands will stay on the high street during that period, but they eventually want Co-op Bank customers to become Coventry society members.

Coventry said it will benefit from having more customers, mortgage and savings balances, a wider set of finance products including current accounts, and more branches spread across the country.

Coventry manages about £50 billion worth of mortgages and £48 million worth of savings.

Co-op Bank has about 2.5 million retail and business customers, and 50 branches across the country, and is often known for having its own ethical policy, including how it limits climate change.

It is not the only mega-deal in the UK’s banking sector this year.

In October, Nationwide Building Society took over Virgin Money in a deal worth about £2.9 billion, creating Britain’s second-biggest savings and loans group.

Nationwide said earlier this week that it has gained £2.3 billion since the deal went through, and that the value of Virgin Money was well above the £2.8 billion takeover price.

The tie-up marked the UK’s biggest banking merger since the financial crisis.