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HSBC, Merrill get online
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April 18, 2000: 8:11 a.m. ET
UK bank and US brokerage to pump $1B into global Net joint venture
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LONDON (CNNfn) - HSBC Holdings and Merrill Lynch will each stump up $500 million to fund a new online banking and investment joint venture for retail customers outside the United States. The partners aim to combine HSBC's worldwide presence with Merrill's investment expertise.
The new firm, to be named Merrill Lynch HSBC and based in London, will open for business later this year, the companies said Tuesday. The venture will then extend its services to consumers in countries including Germany, Canada and Australia.
HSBC chairman John Bond denied the deal was a precursor to a full-blown HSBC bid to acquire Merrill.
"There's no further agenda whatsoever," Bond told a London news conference.
A spokesman for Merrill Lynch (ML: Research, Estimates), the largest U.S. securities brokerage, told CNNfn.com the new business would be aimed at individuals with "investable assets" of between $200,000 and $500,000. The company declined to say how many customers it expected to sign up, although it said the next decade was likely to see the number of non-U.S. customers in that category quadruple to 50 million.
Merrill Lynch chief executive David Komansky told the news conference the venture would break even in four to five years. 
"This initiative shows our determination to use the Internet to build new businesses in the rapidly expanding global market for personal investments," HSBC's Bond said in a statement.
HSBC is one of only two banks to attempt to build a worldwide network in retail banking - the other is New York-based Citigroup (C: Research, Estimates).
Britain's HSBC has a strong presence in its home market and in Asia, and recently established a foothold in continental Europe through the $10.6 billion takeover of French consumer banking firm CCF (PCCF).
The new venture will be based around a deposit account, through which customers can invest in a range of assets, including stocks, bonds and pooled funds. The service will be extended to offer an online bill payment service, mortgages and credit cards.
The ability to offering online banking services has become a key requirement for financial institutions, as customers place ever less reliance on branch-based banking. Spain's BBVA and its partner Terra Networks recently paid $2.3 billion for first-e, a pan-European online bank startup. 
Merrill and HSBC, instead of going it alone in building a worldwide banking business, decided "we can do more together, and faster," according to the Merrill Lynch spokesman.
The new venture will have about 200 staff within a year, mostly in London.
HSBC (HSBA) stock was little changed at 694 pence in London midday Tuesday.
HSBC is Britain's largest bank by asset value, and ranks second in Europe behind Deutsche Bank (FDBK). Merrill Lynch is the world's largest underwriter and market maker for debt and equity securities, and manages client accounts worth $1.8 trillion. 
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