RPT/Merrill Lynch, HSBC to Create New Company Forming the First Global Online Banking & Investment Service

Business Wire, April 18, 2000

Business Editors

REPEATING...

NEW YORK/LONDON & HONG KONG--(BUSINESS WIRE)--April 18, 2000

Customers offered unmatched web-based access to the combined

services of two of the most respected global financial

institutions

Merrill Lynch (NYSE:MER) and HSBC Holdings plc (NYSE:HBS) are joining forces with a groundbreaking 50:50 partnership to create the first global online banking and investment services company.

The new company will serve individual customers across the world except in the United States, providing the industry's most comprehensive and innovative range of online banking and brokerage services for consumers who prefer to make informed investment decisions for themselves.

HSBC and Merrill Lynch together will provide up to $1 billion in start-up capital. The new company will be co-branded "Merrill Lynch HSBC" and its formal name will be announced shortly. It will be headquartered in London and will be launched later this year in the UK, followed by Australia, Canada, Germany, Hong Kong and Japan, with other parts of the world to follow.

The new company's interim Chief Executive will be Edward L. Goldberg, currently Merrill Lynch's Executive Vice President of Operations Services. Mr Goldberg has been with Merrill Lynch for 39 years and has extensive experience in operations, systems, technology and the private client business. The Chief Operating Officer will be appointed from HSBC and announced shortly.

"We couldn't be more excited to be working together," said David H. KTomansky, Chairman and Chief Executive of Merrill Lynch, and Sir John Bond, HSBC Group Chairman. "This revolutionary new online business combines the strengths of our firms -- financial expertise, innovative products and services, research content, technology platforms, geographic reach and strong brands -- to create the model for client service in the 21st century. By combining resources, our two companies are able to serve customers in more markets, more quickly and more effectively than either one could on its own."

The new company strategically combines Merrill Lynch's world-wide investment capabilities and its award winning-research team with HSBC's global presence, client relationships and processing capabilities.

"By leveraging the recent success of Merrill Lynch Direct in the US and by forming this partnership with HSBC we will accelerate dramatically the global roll out of an online business for affluent individual investors," Mr. Komansky said. "This unique venture is the first online offering combining world-class personal banking and investment services. Each company's product and service offerings fit well, as do our geographic strengths. With HSBC's international reach and extensive presence in many of the world's emerging markets, as well as among the more affluent communities in Europe, the winner in this venture is unquestionably the customer.

"At a stroke, the new company makes HSBC and Merrill Lynch global players in e-commerce. In fact, key measures indicate continued robust growth in online usage around the world. Coupled with the desire of global customers to seek out sound and reliable financial institutions, there's never been a better time for our two companies to re-invent the manner in which quality banking and investment services are delivered."

Sir John Bond added: "When we announced our results for 1999 we said that we believed e-commerce will change the fabric of how business is done in financial services. We also said it's time to go to market. This initiative shows our determination to use the Internet to build new businesses in the rapidly expanding global market for personal investments. The new company will have a transforming effect on the rate at which HSBC's e-business strategy can be implemented. It is a major step forward for our wealth management strategy.

"By joining with Merrill Lynch, one of the world's pre-eminent brands in financial management, we will accelerate our ability to deliver a range of high-quality investment and banking services to this burgeoning market. Working together we can draw on our combined resources, both human and financial, to expand these services globally."

As they take more control of their finances, people will want information, product choice and access to international markets. Across Europe, Asia-Pacific, Japan and Latin America, it is estimated that the number of households who are "on the net" and are active investors will grow more than four-fold in the next decade to 50 million.

At the core of the new company will be a deposit account through which customers will be able to invest in a wide range of products including stocks, bonds, mutual funds and unit trusts and tax-efficient products appropriate to each local market. They will also have access to a wide range of market information. Through the same account, customers will earn a high rate of return on their cash and be able to access it via check, charge card, wire transfer or automated teller machines. Over time, the service will be extended to include a range of online banking products such as bill-payment facilities, mortgages and credit cards.