The Hong Kong and Shanghai Banking Corporation (HSBC) is planning to set up an asset management company (AMC). This was reported by a leading business daily.

The setting up of an AMC is the first step in the launch of mutual fund (MF) schemes. HSBC has outlined plans to come out with its schemes by the first half of the next year. It plans to seek permission from the Securities and Exchange Board of India (SEBI) and the Foreign Investment Promotion Board (FIPB) for launching the AMC.

HSBC's entry into the MF scene bears strong synergies with its current operational framework from three aspects:

• An extensive branch network (26 in all) spread across the country. HSBC has already acquired some experience in marketing mutual funds by selling third-party mutual fund schemes.
• Experience in managing financial assets through its banking operations. In addition to asset management, HSBC also has a strong presence in depository services, merchant banking as well as investment banking.
• HSBC already has a steady, high networth clientele in place. It won't take long for the MF to develop critical mass to ensure viability of operations.

Enormous inflows posted by the MF industry over the past 6 months, has attracted a number of foreign banks to this business. In the past, ANZ Grindlays Bank and American Express Bank have announced plans to set up AMCs.

The MF segment will get more competitive as foreign banks launch their schemes. These banks with expertise in offering banking products and services will be able to launch quality products and provide stiff competition to the existing MFs.

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