Merrill Lynch is in talks with HSBC on winding down its involvement in their sharedealing joint venture MLHSBC, according to a report in the Financial Times.
The joint venture operation between Merrill and HSBC is aimed at the new mass affluent consumer market and invites investors to manage their investments and banking online, through an integrated multi-currency investment and banking account. The two companies had committed $1 billion to create the new entity and have so far set up outposts in Canada, the UK, and Australia.
The Financial Times report says MLHSBC has attracted fewer than 4000 customers in the UK since its launch in May, and share trading is running far below target because of the slowdown in global markets. The company has responded by cutting fees, reducing staffing levels and shelving plans to expand into Germany and Japan.
Merrill Lynch is seeking to reduce its role in MLHSBC as part of its push to close unprofitable businesses, says the FT. However unilateral withdrawal would trigger penalty clauses and the US bank hopes to negotiate an agreement with HSBC to restructure its involvement with substantially lower costs, writes the paper.