A major city employer is poised for a historic merger that would make it the biggest mutual in the country.

Family Investments, which employs 400 people on West Street, Brighton, is to join forces with Engage Mutual.

The combined business would be headquartered in the city and have assets worth £6 billion and capital reserves of more than £130 million.

Engage Mutual currently employs 200 people in Harrogate. It is not yet clear if the announcement will mean new jobs in Brighton.

The mutual, which is owned by its two million members, is a market leader in savings accounts for families and children and recorded a surge in profits of 30% last year.

Chief executive Simon Markey, who will lead the combined company, said: “This is historic news for both businesses involved and also for the mutual industry as a whole.

“It is very unusual for two successful organisations to merge specifically for the interests of the members and it’s been very well received by staff here in Brighton.

“The move is very much part of our strategy of creating a new, modern mutual.

“Now we’ve made the announcement we will be looking at the business over the next three or four months but it’s too early at the moment to tell what it means for Brighton.”

Family Investments has 40 years’ experience and already looks after more than £4.9 billion of family money for about two million people.

It has managed the Post Office ISA since 2008, provides 1.2 million child trust funds and is an award-winning provider of junior ISAs.

Engage Mutual is a large UK mutual with 500,000 customers.

The proposal is subject to regulatory approval and legal conditions.

To proceed the proposal needs the approval of 75% of members and is then subject to regulatory approval.

It is expected to be concluded in the first half of 2015.