Nationwide is expected to announce that it is taking over two smaller rivals in a deal that will value the building society at £191 billion.

Nationwide, already Britain's biggest building society, said yesterday that it was in advanced talks with the Derbyshire and the Cheshire building societies. The completed deal is likely to be confirmed today.

However, the two smaller societies' 910,000 members are unlikely to receive a windfall because the Derbyshire and Cheshire will retain their own brands and branches.

No money will change hands in the deal, which must be approved by the societies' members. The three societies will together have almost 16 million members.

Sources close to the transaction said last night that Nationwide, which is based in Swindon, believed the deal would help to prop up the building society sector.

As the credit crunch has bitten, small societies have struggled to obtain funding in the interbank lending market, forcing them to withdraw some products.

“This is about protecting the sector and Nationwide is well placed to do that because they've benefited from the flight to quality,” one source said.

But experts said that the deal was unlikely to kick off a wave of consolidation because most societies had business models that could steer a path out of the economic doldrums.

Steve Williams, head of building societies at Deloitte, said: “We should expect to see a few more deals, although it will be a trickle rather than an avalanche.”

Graham Picken, Derbyshire chief executive, is thought to have approached Nationwide in the summer. The Derbyshire is believed to have been concerned about the quality of some assets held in the society's treasury after it bought books of commercial and sub-prime loans from providers GMAC and Kensington in the past few years.

Mr Picken is likely to have been concerned about the potential for losses if economic conditions in the UK continue to deteriorate.

The Derbyshire's pre-tax profits fell by almost 60 per cent last year to £9.6 million after it took a £4.5 million charge to increase its provision for bad debts. The building society, which has 50 branches, withdrew from the sub-prime market this year.

Karen McCormick, Cheshire's chief executive, is believed to have made a more recent approach to Nationwide. She is not thought to be concerned about the Macclesfield-based society's assets, but about how well the Cheshire, which has 45 branches and 13 estate agency outlets, will trade if the market continues to worsen.

Nationwide, which took over the Portman Building Society last year, has benefited from the so-called flight to quality that occurred after the collapse of Northern Rock. Nationwide took £1 in every £5 saved in the financial year to April 2008, opening 1.5 million new savings accounts.

Savings fund 71 per cent of Nationwide's business, which means that it is less reliant on borrowing from the wholesale market. The society has pulled back from the mortgage market in the past financial year, cutting its share of new mortgages from 11 per cent to 7 per cent as it focused on higher-quality lending.

It took a £726 million hit on the value of its £25.5 billion worth of treasury assets in 2007 as a result of the credit crunch, but the loss will not crystallise because it will hold the assets to maturity. It also booked an actual loss of £102 million on its investments in structured investment vehicles.

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