Around 70,000 customers of Lambeth Building Society are set for windfalls after it yesterday agreed to merge with rival Portman, which takes in the Wolverhampton-based Staffordshire Bulding Society.
At least £400 will be paid to each Lambeth member when the merger with Portman - the UK's third largest building society - is completed by September.
Outlining the terms of the marriage, Portman yesterday said that no compulsory redundancies were planned as staff from Lambeth's head-quarters in London would be offered roles at Portman's head office in Bournemouth and its administration centre in Wolverhampton.
Those head office staff unable to move to either of these locations will receive "generous" redundancy compensation, Potman added.
Seven of Lambeth's nine branches will be kept open, though the Bromley and Woking outlets will close since Portland already has a presence in those areas.
Portman, which has 143 branches and 1.8 million members with total assets of £17.8 billion, added that it was committed to remaining a mutual.
The deal, which will lead to the merged group using the Portman Building Society name, must be approved by Lambeth members and confirmed by the Financial Services Authority.
Portman said customers of both building societies could "only benefit" from the merger - with the growing cost of regulation and investment in technology making the deal attractive for both companies.
Chief executive Robert Sharpe said: "Whilst there is no doubt that small and medium-sized building societies are able to trade profitably, we all operate in an increasingly challenging market environment.
"The growing costs of regulation, the requirements of Basel II and the expenditure needed to invest in ever more sophisticated technology together make a compelling case for this merger.
"Members of both societies can, in our view, only benefit from this merger. The enlarged society's economies of scale and wider distribution will generate tangible benefits in terms of products and pricing."
Chris Radford, chief executive of Lambeth, said customers would benefit from a wider branch network and better products and services.
"This is an exciting and important decision for Lam-beth Building Society which we believe allows our members to continue to benefit over the long term from competitive products supported by excellent service and a wider branch network in the south of England," he added. "Lambeth is a sound business, with excellent staff and a strong balance sheet.
"We believe that the proposed merger with Portman can only increase our competitiveness in the market and allow our members to benefit from market-leading products and services."
Lambeth is the 20th largest building society in the UK, has assets of around £1 billion and employs 130 staff.
In January, the Leeds and Mercantile Building Societies announced they were to merge, creating a new society with around 635,000 customers, 69 branches throughout the UK and around 1,000 employees.