DBS to merge retail equities trading into bank by year-end

Singapore

DBS, Southeast Asia's largest bank by market value, will transfer its retail equity trading under DBS Vickers to the bank by the end of the year, leaving the securities and derivatives arm to focus on its institutional clients.

At an hour-long townhall meeting on Wednesday evening with sales representatives from DBS Vickers, senior management shared this integration strategy, a move the bank initiated six years ago.

In response to queries from The Business Times, a DBS spokesman explained that over the years, the bank has noticed growing demand among customers for a one-stop platform which allows access to a full array of banking, brokerage and wealth management solutions.

"In 2013, we became the first Singapore bank to offer banking and broking under one roof, strengthening our wealth proposition. At the time, we moved a number of employees from DBS Vickers into the bank as part of this concerted effort to cater to demand for a more holistic wealth proposition and serve customers better.

"Since then, the case for integrating our retail equities trading business with wealth management has become even more compelling," the spokesman said.

With an integrated investment platform that includes equities trading capabilities, customers will be able to manage their entire investment portfolio in a unified manner, and DBS Vickers employees will be able to advise on a larger suite of investments and provide consolidated portfolio monitoring, the spokesman elaborated.

"Given this, we have plans to transfer retail equity trading into the bank by the end of the year. Until then, it will be business as usual for retail customers."

"DBS Vickers will maintain its broking licence and will continue to focus on its institutional trading business," the spokesman said, adding that the bank would work towards a smooth transition for employees.

DBS Vickers has more than 150 mobile brokers and fixed-desk remisiers.

BT understands that all employees of DBS Vickers will be offered new roles in the bank. As for the remisiers, who are self-employed trading representatives, the spokesman said the bank would do its best to offer them jobs.

After the integration, DBS Vickers will continue to offer the complete suite of products and services including exchange traded funds, placements, equities, bonds, initial public offers to institutional investors.

The same suite of products will also be made available across the bank's consumer bank and wealth platforms.

Current DBS Vickers chief executive officer, Lim Kok Ann, is retiring on March 31. Lionel Lim, who was previously from capital markets syndication, will succeed him on April 1.

One remisier shared that some remisiers who are 62 and above are "anxious about the job they have been doing for the past 20-30 years". Others voiced concerns over the new job scope.

When contacted, Jimmy Ho, president of the Society of Remisiers, disagreed with the bank's strategy.

"Stockbroking is a profession. Subsuming stockbroking under the banks diminishes professionalism, as when we provide convenience to clients under-one-roof, we are undermining the importance of share investment that needs delicate attention and care."

Mr Ho warned against following international practices without sufficiently weighing the pros and cons within a local context.

"Such a tendency satisfies the ease of administration more than being productive. We already saw various examples of foreign banks...making stockbroking the sacrificial lamb in their business. Many charge meagre or even, zero brokerages on stockbroking to lure funds forward as a means to divert investments into other financial product areas of their portfolio. Such practices are myopic, destroys the fabric of the stockbroking industry and are not to be encouraged. Yet, many a time, these moves have been mistaken as part of 'the future trend'".

Stock brokers and remisiers - middlemen buying and selling stocks on behalf of investors, collecting a commission for each transaction - are slowly becoming a dying breed. Thanks to the Internet, investors are now capable of doing themselves what these brokers traditionally charge them to do.

Consolidation of the brokerage industry in Singapore started in earnest in 2000 when UOB Securities merged with Kay Hian Holdings. The combined entity was the second biggest brokerage in the city-state and the merger preceded government measures to lower entry barriers to Singapore's securities industry. The following year, DBS Securities and Vickers Ballas became DBS Vickers in a S$444 million deal.

Brokerage commissions were fully liberalised in October 2000. Before that, commissions - the main source of earnings for most securities houses - were fixed by the stock exchange and only negotiable for sums above S$1 million or S$1.5 million, subject to a minimum of about 0.285 per cent or 0.3 per cent. They could be as high as one per cent. Today, they range in a narrow band of 0.12 per cent to 0.28 per cent of contract value.