UOB Kay Hian emerges as suitor for DBS Vickers' remisier base

Singapore

UOB Kay Hian, the largest securities brokerage in Singapore, has emerged as a keen suitor for the 150-odd remisiers and retail equity trading representatives at DBS Vickers, the broking arm of Singapore government-linked DBS Bank.

Sources told The Business Times (BT) that representatives of UOB Kay Hian and DBS Bank have met and negotiations are underway.

The offer is for the transfer of the remisiers and the trading representatives as a group - a move they reckon is more efficient than poaching individuals one by one.

DBS held another townhall meeting on Wednesday, after meeting UOB Kay Hian, to further update and engage remisiers and brokers, and to hear their feedback and concerns.

The potential sale of the DBS Vickers remisier base is the latest twist in a simmering episode involving DBS Vickers' retail equity brokers and remisiers.

Unlike brokers, remisiers are not full-time staff. They are not paid a basic salary, but take a larger share of the commissions split.

DBS Bank, South-east Asia's largest bank by market value, has been looking to revamp its retail stock-brokerage operations and exploring alternative models to DBS Vickers in a bid to provide customers with more value-added propositions.

The bank had previously dismissed rumours that it was planning to shut down the retail stock brokerage. It said in late February that it would be transferring the retail equity trading under DBS Vickers to the bank by the end of the year.

All employees of DBS Vickers have been offered new roles in the bank. However, not all the remisiers - being self-employed trading representatives - wanted to move to the bank, which did its best to offer them jobs.

Singapore's brokerage industry has changed drastically over the years, with deregulation, cuts in commissions and the advent of online trading among the disruptions.

Consolidation of the brokerage industry in Singapore started in earnest in 2000, when UOB Securities merged with Kay Hian Holdings, creating a combined entity that is the second biggest brokerage in the city-state.

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, compared to the meagre rates now.

Today, the market is dominated largely by bank-linked houses like DBS Vickers, Maybank Kim Eng, RHB Securities, OCBC Securities, KGI Securities and UOB Kay Hian, as well as independent brokers like Phillip Securities and Lim & Tan.

The revamp of DBS Vickers is part of an integration strategy the bank initiated six years ago in 2013. DBS was the first to put banking and broking under one roof, strengthening its wealth proposition.

At that time, it moved a number of its employees from DBS Vickers into the bank in an effort to cater to demand for a more holistic wealth proposition.

The initiative was rolled out in phases, starting with DBS Treasures Private Client and DBS Private Bank customers in mid-2013; the same unified service was extended to all other DBS customers by end-2013.

The rollout meant that DBS customers can tap a team of equities specialists within the bank for advice on equities-related investment options.

With an Internet banking account, customers are also able to trade online, while having access to more than 85 iBanking services such as telegraphic transfers and electronic payment for shares.

With more options, customers do not have to maintain separate banking and brokerage relationships.