HSBC to begin offering funds in Australia

MELBOURNE, May 2 (Reuters) - HSBC (HSBA.L: Quote, Profile, Research, Stock Buzz) plans to begin offering some of its investment funds to Australian institutions and pension managers soon, the bank said on Friday.

Australia's funds management sector is especially attractive because of the hundreds of billions of dollars in assets generated by the country's mandatory superannuation scheme.

HSBC Australia's Chief Executive Stuart Davis said HSBC's funds management arm plans to distribute emerging-market (BRIC) funds and alternative investment funds, among others.

"We've got a lot of high-performing, different types of funds from the group offshore, and it's just a matter of matching those high performance funds to the investment appetite of institutions in Australia," Davis told reporters after a business lunch. HSBC's Asia fund arm manages more than $60 billion and plans to double that in the next three to five years, helped by expansion into markets including Australia and possibly Vietnam and South Korea.

HSBC pulled out of the asset management business in Australia in 2005, when it sold its in-house investment management business to Challenger Financial Services Group Ltd for A$22 million. The unit, with A$3.5 billion funds under management, offered unit trusts, wholesale funds and personal superannuation.

Davis also said he expected global credit markets would not improve this year, and the major Australian banks were likely to continue raising mortgage rates beyond the central bank's official moves to recover the high cost of funds. HSBC has a small mortgage business in Australia.

Local banks have so far raised mortgage rates three or four times more than the Reserve Bank of Australia has lifted official rates. ($1=A$1.07) (Reporting by Victoria Thieberger; editing by Jonathan Standing)