Then came the announcement of the online joint venture with Merrill Lynch. Sir John has pledged US$1 billion to the gameplan. Merrill Lynch ...

Then came the announcement of the online joint venture with Merrill Lynch. Sir John has pledged US$1 billion to the gameplan. Merrill Lynch HSBC will pilot the new platform in Birmingham, in the U.K., in the early summer. The joint venture partners plan to roll out in 21 countries by 2004. The combined strikeforce will marry Merrill’s U.S. expertise at packaging brokerage services, mutual funds and cash management accounts with the global banking reach of HSBC, which has 23 million customers worldwide. Merrill Lynch HSBC aims to provide one-stop shopping for online banking and investment products for the mass affluent market. These are individuals and families with net investment funds of US$100,000 to US$500,000. James Gorman, a former McKinsey & Co. partner, is Merrill’s head of marketing for the strategy. On the HSBC Republic side, Roberta Arena, a former Citicorp executive and the right-hand woman of the HSBC chairman, structured the project. The move answers a lot of Merrill’s critics who have complained for some time about the bank’s lack of a global Internet strategy. During the past 18 months, it has watched Donaldson, Lufkin & Jenrette and Charles Schwab among others, streak ahead in the international market, while its own domestic online business has surged. The Merrill/HSBC deal offers synergy in two key areas. Firstly, HSBC’s premium client base in Asia, Europe and the emerging markets is matched by Merrill’s strength in the U.S. Secondly, HSBC has a broader array of banking products, complement Merrill’s brokerage and mutual fund ranges. It is not yet clear if this is a quick fix for both firms to their online dilemma or a shrewd cost saving measure. It also raises an interesting strategic question for the two groups’ private banking teams. Which of the joint venture partners will be able to use the online channel as a referral base for new private banking clients? At first glance, it seems likely that HSBC Republic will take this honour—making it unclear what Merrill’s private banking division will get out of the deal. HSBC may not be alone among the big wealth management spenders. Deutsche Bank Group has also announced it has US$19 billion in reserves for acquisitions. If the failed Dresdner Bank deal was a touchstone, private banking may also feature in the Germany bank’s spending plans.