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Merrill Lynch, HSBC to Create Global Online Bank

Investment bank Merrill Lynch and international banking giant HSBC this week formed a partnership to create an online banking and investment service for individual customers outside the United States.

The new company, to be called Merrill Lynch HSBC, will start trading with up to $1 billion in capital. Like HSBC, it will be headquartered in London, and later this year will launch its services in the U.K., followed by Australia, Canada, Germany, Hong Kong, Japan and elsewhere.

The two partners say that Merrill Lynch HSBC will be offering a comprehensive range of services, including online banking and brokerage, to people who are "able to take their own informed investment decisions."

At its launch, the new company will be headed by Merrill Lynch veteran Edward L. Goldberg, 39 years with the firm and currently executive vice president of Operations Services. HSBC will appoint the chief operating officer.

"At a stroke, the new company makes HSBC and Merrill Lynch global players in e-commerce," said David H. Komansky, chairman and chief executive of Merrill Lynch.

Komansky said there has never been a better time for the two companies to re-invent the manner in which quality banking and investment services are delivered.

Sir John Bond, HSBC group chairman, added that the new company would have a transforming effect on the rate at which HSBC's e-business strategy could be implemented.

"Working together we can draw on our combined resources, both human and financial, to expand these services globally," said Bond.

HSBC and Merrill Lynch anticipate that the number of households on the Internet in Europe, Asia-Pacific, Japan and Latin America will grow more than four-fold in the next decade to 50 million. Among them, say the partners, is a huge number of active investors who need information, product choice and access to international markets.

Merrill Lynch HSBC will offer, at its core, a deposit account where customers can invest in stocks, bonds, mutual funds and unit trusts, while earning what the partners say will be "a high rate of return on their cash." Multiple means of access to the money will be a feature of the account, with checks, charge cards, wire transfers and automated teller machines all scheduled to be part of the service.

The new venture brings together two of the world's leading financial enterprises. Merrill Lynch currently manages client assets of $1.8 trillion, while HSBC had assets of $569 billion and 23 million customers at the end of last year.