HSBC Holdings Plc, Europe's largest bank by market value, said it remains committed to its US$1 billion online brokerage venture with Merrill Lynch & Co.
"We're not going to walk away from the business," David Eldon, chairman of HSBC's Hong Kong & Shanghai Banking Corp, said.
"Clearly, from the day we put that business together, the markets have changed dramatically. The potential for growth is not how we projected when we started." HSBC's commitment to the venture comes at a time when the bank is seeking further ways to reduce costs as world economies slide.
Hong Kong's economy probably didn't grow last year after expanding 10.5 percent in 2000. Taiwan's economy probably contracted 2.38 percent in 2001, the central bank said last month.
In December, Merrill Lynch said that it may reduce its involvement in the venture with HSBC as the biggest brokerage cut jobs and costs amid an economic slowdown.
Merrill Lynch HSBC offers high-interest accounts, share dealing and other services to inves-tors with more than US$100,000 to spend in the United Kingdom, Canada and Australia.
This month, Merrill said it will take a fourth-quarter US$1.7 billion charge, its largest ever, as Stanley O'Neal, named company president in July, fires staff and leads a retreat from an expansion that left the bank less profitable than rivals.
Eldon, in Taiwan to open HSBC's eighth branch on the island, said at a news conference the bank may fire more staff as it seeks to cut costs. Last year HSBC eliminated 370 jobs around the world.
"If you look around the world today, everyone is laying people off and we're not going to be immune from it," Eldon said.
"But don't expect any large-scale redundancies." He said the bank isn't in any discussions aimed at acquiring a Taiwan lender.
Taiwan's government is encouraging its banks to combine in an effort to shore up a financial system burdened by bad loans. HSBC has been on the lookout for acquisitions after obtaining shareholder approval in May to sell as many as 1.9 billion shares to finance purchases. It made 18 acquisitions last year.
"We continue to strengthen our business here [in Taiwan] through organic growth," Eldon said. "There is nothing we are in talks about" acquiring.
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