Swiss investment bank UBS Warburg has sold its retail broking operation in Singapore's increasingly cut-throat market to Oversea-Chinese Banking Corp (OCBC) and will concentrate on its institutional business. The city state's liberalisation of its financial regulations meant UBS Warburg would have a licence to operate as a broker without need for a Singaporean partner by the end of next month when the deal was completed, said UBS Warburg's Singapore branch manager, Rolf Gerber. 'To have an investment in the retail operation, which goes back eight years ago, was never part of our strategy. So today actually we are aligned with our global strategy of concentrating on healthy institutional business,' he said. OCBC, Singapore's third-largest bank by assets, will pay up to S$124.5 million (about HK$558.89 million) for UBS Warburg's joint venture with Swift, a holding company for the local management of the operation. Alex Au Siu-kee, OCBC vice-chairman and chief executive, said the deal would be funded from existing resources and could be followed by further acquisitions as the bank struck out to establish a regional footing. OCBC was intent on reducing its capital-adequacy ratio from 25 per cent - the highest in the city state - to below 20 per cent to try to boost its return on equity, Mr Au said. The Monetary Authority of Singapore sets a maximum capital-adequacy ratio of 12 per cent. 'We don't have any [further deals] under consideration, but we are keeping an open mind on this,' Mr Au said. OCBC is thought to have set its sights on a move in Taiwan or Hong Kong. Yesterday's deal comes just two months after broking commissions in Singapore were completely liberalised. Analysts said market players either had to bulk up through acquisitions to reap greater economies of scale and cut costs, or leave the arena altogether. 'The stockbroking environment in Singapore has become much tougher with commission deregulation in October,' Mr Au said. 'At the industry level, I have no doubt our acquisition of UBS Warburg's Singapore [retail] securities operations will play a significant role to spur the industry towards greater consolidation and competitiveness.' The deal leaves OCBC, through its OCBC Securities unit, with 11 per cent of the equities market, the third-largest player. The combined business will have 120,000 retail clients. There were no details on how many jobs would be cut as the firms were brought together. Leong Mun Wai, a managing director at OCBC Securities, said he hoped some staff could be redeployed to other areas of the business. The deal is the second in as many months in Singapore's broking industry. Last month, Kay Hian merged with UOB Securities, the broking arm of United Overseas Bank. Mr Leong said: 'Financial liberalisation will not kill the stockbroking business in Singapore, but the old stockbroking business will give way to a new business model where new and stronger players will emerge.' Meanwhile, US investment bank Salomon Smith Barney announced it had acquired the 20 per cent it did not already own in its South Korean unit, Salomon Smith Barney KEB Securities, from its joint-venture partner Korea Exchange Bank. A price has yet to be finalised for the agreement which will see the unit renamed Salomon Smith Barney Korea. The joint venture began operations in February 1997.