(April 18 – 10:20 ET) – Merrill Lynch and HSBC Holdings PLC are teaming up to create the first global online banking and investment services company. The new company will offer online banking and brokerage services to clients from everywhere except the U.S.

HSBC and Merrill Lynch are kicking in up to US$1 billion in start-up capital to found “Merrill Lynch HSBC”. The new firm will be headquartered in London and will be launched later this year in the UK. Launches in Australia, Canada, Germany, Hong Kong and Japan will follow. Edward Goldberg, Merrill’s executive vice president of operations services, will be interim CEO.

Clients of the new firm will build their relationship around a basic deposit account, that will be used to invest in a wide range of products including stocks, bonds, mutual funds, unit trusts and tax-efficient products. Merrill says clients will earn a high rate of return on their cash and they will be able to access the account by cheque, charge card, wire transfer or bank machines. Over time the service will be extended to bill payment, mortgages and credit cards. Customers will also have branch access in key locations and 24-hour phone support.

Merrill Lynch is downplaying fears that this joint venture with HSBC Holdings PLC will cannibalize existing clients from its full-service advisors.

Merrill maintains that the new firm, “will complement, not replace, Merrill Lynch’s and HSBC’s existing advice-based private client businesses for affluent and higher-net worth individuals. We anticipate that, over time, some clients will migrate to the private client businesses of
banks of the parent organisations.”

Nevertheless Merrill concedes there will be some competition in products that are offered through both the existing and the new online channel. The new initiative “broadens the platform of choice to existing clients,” the firm argues, allowing that “we will make the new services available to clients who may be interested, but the ultimate choice to migrate belongs to the client.”

The new firm will focus on new clients with investable assets of between US$100,000 and US$500,000.
-IE Staff