HSBC and Merrill put $US1 billion into net bank

LONDON - Merrill Lynch and HSBC have pressed ahead with the delayed launch of their new $US1 billion ($NZ2.35 billion) internet banking joint venture in a bid to grab some of the emerging "mass affluent" category of customers which banks are keen to have on their books.

HSBC and Merrill's have agreed to invest $US500 million each over the next five years in the project, which will offer trading and other banking services over the internet.

They aim to reach profitability after that.

Margaret Barrett, chief executive of the venture, which is called Merrill Lynch HSBC, defended the decision to go ahead in the current depressed stock market conditions, which have seen many private individuals stop trading.

"Volumes are not where they were at the peak of last year, but the services we will offer like analysts' research is what is needed in the market now," Ms Barrett said.

The two banks said the new service is aimed at four million people in the UK with £65,000 to £350,000 ($NZ220,000 to $1.18 million) in assets.

The offering is the latest attempt in the banking sector to capture wealthy customers, as the income from commission is substantial and the banks can cross-sell a whole range of other products.

However, banks have so far found it more difficult than they thought to grow this type of business.

- INDEPENDENT