UPDATE 1-UBS merges equity, debt capital markets businesses in Asia -memo

* ?Gaetano Bassolino named head of Asia Pacific capitalmarkets

* UBS says overlapping investors, product crossover led torevamp

* Regulator has blocked UBS for 18 months from sponsoring HKIPOs(Adds details from memo, UBS facing suspension in Hong Kong)

HONG KONG, March 15 (Reuters) - UBS Group ismerging its equity and debt capital markets businesses in AsiaPacific in a move that comes as its powerhouse equitiesfranchise faces a suspension in Hong Kong from leading initialpublic offerings (IPOs).

According to an internal memo seen by Reuters on Thursday,?Gaetano Bassolino, currently head of the debt capital markets(DCM) business in the region, will become head of Asia Pacificcapital markets.

"It is clear there are synergies that exist across ECM andDCM, such as overlapping investors and product cross over,"David Chin, UBS head of Asia Pacific corporate client solutionsbusiness, which covers investment banking, told staff.

A UBS spokesman confirmed the contents of the memo.

Sources within the bank told Reuters discussions about thechange in structure had been underway for a while.

Several other banks operate a similar system in the regionand globally in an effort to better co-ordinate the servicesthey offer clients.

UBS's internal reorganisation comes just days after the bankdisclosed the Hong Kong securities regulator had blocked it fromsponsoring IPOs for 18 months. The suspension, which the Swissbank is appealing, is not effective until its appeal has beenruled upon.

Sponsors in Hong Kong carry liability for misinformationcontained in prospectuses but can expect the biggest share ofthe deal's fee pool for their role of driving the transaction.

UBS has long been an equities powerhouse in the region, onlyonce ranking outside the top three in Asia-Pacific league tablesfor the past decade, according to Thomson Reuters data.

So far this year, the Swiss bank is second to Goldman SachsGroup, with $3.8 billion of deals to its credit comparedto Goldman's $6.2 billion.

In debt markets, UBS is a smaller player, ranking 11th inthe region this year for bonds sold internationally outsideJapan, with $2.6 billion of deals to its credit compared with$6.5 billion and $4.9 billion for HSBC and Citigroup, respectively, who typically lead the rankings.(Reporting by Julie Zhu; Writing by Jennifer Hughes; Editing byMuralikumar Anantharaman)