Hughes joined Principality eight years ago and was previously group finance director before becoming CEO in March 2017.
His appointment at Coventry is pending regulatory approval and he will take over from Mark Parsons who announced his intention to retire in October.
No dates have been confirmed for the transition.
In the meantime, chief risk officer, Mike Jones, has been appointed by the board as interim CEO with immediate effect. Jones has more than 40 years’ experience in the finance industry and has been with Principality for more than 20 years and a board member for the past six years.
Gary Hoffman, chairman of Coventry Building Society, said: “Steve is a great fit for us. He has the same vision for the way financial services should work and is passionate about serving members, supporting colleagues and making a difference to broader society.”
Hughes (pictured) added: “Coventry Building Society’s success is based on a mission and a set of values that run through it like a stick of rock. I share these values, and I believe in the mutual model.
“I’m really looking forward to building on the work it does and ensuring we have a building society that is relevant for current and future members, customers and partners.”
“While I’m sorry to see Steve move on, I’m also very grateful for all that he’s contributed to our organisation. Under his leadership the society has grown to more than £10bn in assets, delivered consistently strong financial results and excellent customer service,” Laurie Adams, chairman of Principality said.
He added: “He leaves the business in great shape, with a strong executive team in place who will continue the excellent work of the last few years. A search for his permanent successor will now commence.”