Definition of merchant bank
: a bank that specializes in bankers' acceptances and in underwriting or syndicating equity or bond issues
First Known Use of merchant bank
Financial Definition of MERCHANT BANK
What It Is
How It Works
Like investment banks, merchant banks are not depository/retail lender institutions. Rather, merchant banks are intermediaries that provide brokerage, fund-raising, and financial advisory services on a large scale to businesses and a smaller scale to wealthy individuals. For this reason, they often assist in international transactions involving entities such as multinational corporations.
To illustrate the role of a merchant bank, suppose a multinational corporation XYZ is considering the purchase of a smaller company in another country. Company XYZ will likely solicit the services of a merchant bank for advice on how to best approach the acquisition process. In addition, the merchant bank may also assist in the financing of the acquisition, providing underwriting or loan services.
MERCHANT BANK Defined for English Language Learners
Definition of merchant bank for English Language Learners
: a bank for large companies that trade goods in other countries
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Britannica.com: Encyclopedia article about merchant bank
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