A merchant bank is a financial institution that provides capital to companies in the form of share ownership instead of loans. A merchant bank also provides advisory on corporate matters to the firms they lend to. In the United Kingdom, the term “merchant bank” refers to an investment bank.
Merchant Banking can be defined as a skill-oriented professional service provided by merchant banks to their clients, concerning their financial needs, for adequate consideration, in the form of fee. Merchant banking helps to expand and modernize the business. It helps in reinforcing the economic development of the country, by acting as a source of funds and information to the business entities. It also helps companies to register, buy and sell shares at the stock exchange.
It offers a range of financial and consultancy services, to the customers, which are related to:
- Merger and acquisition related services.
- Advisory services, for raising funds.
- Management of customer security.
- Investment banking
- Portfolio Services
- Insurance Services.
In short, merchant banking provides a wide range of services for starting until running a business.