BEIJING/HONG KONG, June 24 (Reuters) - UBS is

selling a partial stake in one of its securities joint ventures

to Beijing State-owned Asset Management (BSAM), a key step for

the Swiss bank as it consolidates operations in China after its

merger with Credit Suisse.

Its joint venture partner Founder Securities said in a

filing on Monday that Founder would offload its entire holding

of 49% in the joint venture, at a price of 885 million yuan

($122 million).

Meanwhile, UBS is selling a 36.01% stake in the venture to

BSAM for $91.4 million, the Swiss bank said in a separate

statement. UBS's stake had been 51% and it is not clear whether

it continues to hold the remaining shares.

The stake sale comes after UBS started looking for a buyer

for the unit last year after inheriting the ownership from

Credit Suisse.

UBS already has another securities joint venture in China -

UBS Securities - in which it owns a 67% stake, with the

remaining 33% held by BSAM.

China's securities regulation prohibits any entity from

having more than one majority-owned securities firm locally,

which means UBS had to either sell a stake or trim its shares to

minority status.

BSAM outbid Citadel Securities, one of the largest market

makers globally, to win the deal, two sources with knowledge of

the matter told Reuters.

Citadel Securities still sees great growth potential in

China's economy and capital markets, and the outcome in this

process doesn't change its commitment to expanding its presence

there, a source with knowledge of Citadel Securities' thinking

said.

Citadel Securities declined to comment.

One of the sources said UBS leaned towards BSAM because the

Swiss bank plans to boost ownership in UBS Securities, which

requires BSAM to auction off some or all of its holdings.

"We have a comprehensive onshore multi-entity set-up across

the two firms (UBS and Credit Suisse) with specific regulatory

requirements to comply with," UBS CEO Sergio Ermotti said in a

statement.

"So it is optimal for us to sell the 36.01% stake in Credit

Suisse Securities to our key long-term business partner with

whom we have worked closely for almost 20 years to develop our

business in China."

UBS Securities was established in 2006 and became the first

foreign majority-owned securities firm in 2018.

($1 = 7.2580 Chinese yuan renminbi)