The Co-operative Bank is thought to be a step closer to regaining its mutual status when it announces it has struck a £780m deal to be bought by the Coventry Building Society.

The two organisations are expected to announce soon that they have reached agreement on the terms of a transaction, Sky News reports.

The Coventry has nine branches in Gloucestershire, including Gloucester, Cheltenham, Stroud and Cirencester.

Insiders said the cash price to be paid by the Coventry would be close to £800m, Sky News said.

Their statement will mean that a combination of the two financial services businesses is increasingly probable, more than a decade after the Co-operative Bank first came close to collapse.

The Co-operative Bank and Coventry have been in exclusive talks for more than three months, with a range of issues still to be ironed out.

The Coventry is preparing to hold its annual meeting next week, when it could face questions about whether it will allow its roughly two million members to vote on the deal.

City sources said the building society - Britain's third-largest - was not keen to offer its members a vote because of the impact it would have on the takeover's timetable and the potential uncertainty it would create.

If completed, the deal will effectively remutualise the Co-operative Bank and create a financial services powerhouse with close to £90bn in assets.

Combining the organisations would give the Coventry a major boost in the personal current account and business banking markets.