Merrill Lynch HSBC will target affluent investors in Germany and France in 2002.
Merrill Lynch HSBC, the online bank and brokerage for the mass affluent, on Friday announced its plans to open in Germany and France next year, continuing its pan-European expansion. The service has already opened for business in the UK and in Canada.
MLHSBC is an investment and banking service from global financial services providers Merrill Lynch and HSBC, targeting self-directed investors with a focus on online distribution. The UK operation offers customers, with at least GBP50,000 of investable wealth, loans to buy shares, or trade on margin. It also offers an integrated banking and brokerage account that allows customers to trade in UK and US shares. Other services include a high interest savings account and a cash individual savings account, as well as giving access to the two banks’ investment research.
Because of their size and growth potential, Germany and France are seen as markets MLHSBC has to be in. In addition, there are so far no truly international players in the German market, which may allow MLHSBC to position itself as the key international brand.
However, it will be very hard for MLHSBC to gain market share in Germany and France. The big domestic discount brokers dominate both markets, and neither HSBC nor Merrill Lynch has significant individual client businesses there. HSBC, whose retail business is an important source for customer acquisition in other countries, is virtually unknown among individual clients in Germany. Despite the fact that HSBC owns medium-sized French player CCF, HSBC itself does not have strong brand recognition, although MLHSBC would still seek to leverage off CCF’s capabilities on the ground.
In addition, both French and German individual clients tend to prefer established, local brands and can be suspicious towards US providers. MLHSBC’s strong first steps in the UK market may be hard to follow in its target markets.
