BANKING DEFINITION

What is a “Financial Index”

Merchant Banks deal with businesses, governments, private and public companies, private equity firms, and other institutions.  These banks are very similar to Investment banks, however, they provide services tailored more to Multinational Clients and high net worth individuals who operate in many countries.   Merchant Banks normally deal with firms that may not be big enough to use the services of an Investment Bank offering an IPO.  These merchant banks might help the firm through a private placement of securities, with less regulatory requirements.  These securities would be sold to sophisticated investors.  Merchant Banks do not deal directly with the public as commercial banks do, nor do they provide regular banking services like deposit-taking and savings accounts.  They render their services for a fee.

In Britain, a Merchant Bank is the same as an Investment Bank.  In the USA, this is not the case.  In the USA a Merchant Bank is a bank that provides capital to a business in the form of share ownership instead of a loan.  Merchant Banks also specialize in international operations, dealing with clients that operate in multiple countries.

Merchant Banks got their name “Merchant Banks” from the fact that they were originally created to facilitate and fund production and trade of commodities.

The Role of Financial Indices

Merchant banks provide many services to their multinational clients, including underwriting, share issue management, venture capital financing, leasing, acceptance credit and bill discounting, loans including loan syndication, equity financing, bridging finance, credit syndication, portfolio management, international fundraising, foreign corporate investing, financial and corporate advising, project counseling, foreign real estate transactions, trade finance, foreign investments, and other international transactions.

Top Merchant banks include JPMorgan Chase, Bank of America Merrill Lynch, Goldman Sachs, Morgan Stanley, and Citibank.

Graphic: Financial Indices