Investment Banking Tutorials
- Investment Banking Free Course
- Investment Banking Basics
- What is Investment Banking? (Overview of what do they actually do!)
- Investment Banking vs Commercial Banking
- Equity Research in an Investment Bank
- What is Asset Management Company AMC
- Sales and Trading in Investment Banking
- Private Placement, IPO and FPO in Investment Banking
- Investment Banking – Underwriters and Market Makers
- Investment Banking – Mergers and Acquisitions
- Investment Banking – Restructuring and Reorganisation
- Investment Banking Roles and Responsibilities
- Market Makers
- Propreitary Trading
- Deal Origination (Sourcing)
- Initial Public Offering (IPO)
- Top 4 Must Know Investment Banking Charts (Free Download Template included)
- Pitch Book | Guide to Investment Banking Pitch Book (Examples)
- What is LBO?
- Leverage buyout Lbo Analysis
- LBO Financing
- Trading Floor
- Market Order vs Limit Order
- Merchant Bank
- Best Investment Banking Books
- Nasdaq vs Dow Jones
- Nasdaq vs Nyse
- Differences Between NSE and BSE
- Investment Banking Careers
- Investment Banking Interview Questions (with Answers)
- How to get into Investment Banking?
- Investment Banking Job Description
- Investment Banking Associate Salary
- Investment Banking Job For Graduates (Engineers) | Top 8 Tips
- How to get an Investment Banking Internship?
- Top 10 Finance Certifications Programs
- Investment Banking Lifestyle
- Investment Banking Exit Opportunities
- Investment Banking Case Studies
- Top 10 Best Finance courses (with Online Certification)
- Investor Relation Job Description
- Financial Analyst Job Description
- Investment Banking vs Equity Research
- Investment Banking vs Asset Management
- Commercial Banking vs Merchant Banking
- Investment Banking vs Corporate Banking
- Portfolio Management vs Investment Banking
- Investment Banking vs Hedge Fund Manager
- Investment Banking vs Investment Management
- Investment Banking vs Private Equity
- Careers in Trading
- Investment Banking Firms
- Top Bulge Bracket Investment Banks
- Top Middle Market Investment Banks
- Top Boutique Investment Banks
- Investment Banking in Dubai
- Investment Banking in Hong Kong
- Investment Banking in Russia
- Investment Banking in Brazil
- Investment Banking in China
- Investment Banking in Australia
- Investment Banking in Saudi Arabia
- Investment Banking in Singapore
- Investment Banking in London (UK)
- Investment Banking in India
- Investment Banking in Ireland
- Investment Banking in South Africa
- Investment Banking in Canada
- Investment Banking in Germany
- Investment Banking in France
- Investment Banking in Malaysia
- Investment Banking in Philippines
- Investment Banking in Boston
- Investment Banking in San Francisco
- Top Banks
- Top Banks in Australia
- Top Banks In Austria
- Top Banks In Bahrain
- Top Banks In Belgium
- Top Banks In Bermuda
- Top Banks In British Virgin Islands
- Top Banks In Brunei
- Top Banks In Canada
- Top Banks In Cayman Islands
- Top Banks In Denmark
- Top Banks In Finland
- Top Banks In France
- Top Banks In Germany
- Top Banks In Greenland
- Top Banks In Guernsey
- Top Banks In Ireland
- Top Banks In Isle of Man
- Top Banks In Japan
- Top Banks In Kuwait
- Top Banks In Liechtenstein
- Top Banks In Luxembourg
- Top Banks In Macau
- Top Banks In Norway
- Top Banks In Oman
- Top Banks in Pakistan
- Top Banks in Philippines
- Top Banks In Puerto Rico
- Top Banks In Qatar
- Top Banks In Saudi Arabia
- Banks in South Africa
- Top Banks In Singapore
- Top Banks In South Korea
- Top Banks In Sweden
- Top Banks In Switzerland
- Top Banks in UAE
- Top Banks in United Kingdom
- Top Banks in USA
- Mergers and Acquisitions
- What is Mergers and Acquisitions?
- Mergers vs Acquisitions
- Synergy in M&A
- Successful Mergers and Acquisitions
- Financing Acquisitions
- Statutory Merger
- Joint Venture
- White Knight
- Hostile Takeover
- Golden Parachute
- Poison Pills
- What is Amalgamation?
- Spin off vs Split Off
- Forward Integration
- Backward Integration
- Horizontal vs Vertical Integration
- What is Divesting / Divestiture?
- Bootstrap Effect
- PAC MAN Defense
- Flip-In Poison Pill
- Greenshoe Option
- Dawn Raid Takeovers
- Crown Jewels Defense
- Best Mergers and Acquisitions Books
- What is Asset Restructuring?
What is a Merchant bank?
Merchant banks provide financial services including underwriting, loan services, fundraising services, and financial advising to high net-worth individuals and small/mid-sized corporations.
A merchant bank is not the bank for the general public. It’s similar to the investment bank, but a merchant bank and an investment bank are not same. A merchant bank provides services only to high net-worth individuals and multinational companies that have businesses all around the globe. On the other hand, an investment bank provides finance-related services to individuals, corporations, and government.
Services provided by a merchant bank
They provides an entire gamut of services.
Here are the top 5 services by merchant bank to its clients –
- Project Counselling: A project counselling basically by following three steps – preparing the project reports, determining the right financing option, and assessing the merit of the project reports with the banks and financial institutions. Project counselling also involves filling up application forms and trying to fund the project via banks or financial institutions.
- Issue management: As the name suggests, this deals with issuing equity shares, preference shares, and debentures. acts as a partner to a high net-worth client by issuing shares & debentures to the general public.
- Underwriting services: One of the major services of a merchant bank is underwriting services. An underwriting is a guarantee given to the client stating that if the subscription is below a specified level, they would subscribe the said amount.
- Portfolio management: As mentioned earlier, a merchant bank invests in different kinds of investments on behalf of clients; and then manages the whole investments as well.
- Loan Syndication: In simple terms, bankers provide term loans to projects that need the money.
List of Top Merchant Banks
There are many banks in the world and some also provide investment banking services. The below list is taken from Leaderleague.com that ranked USA Merchant Banks in 2016 in TMT vertical.
Leading Merchant Banks
- Bank of America Merrill Lynch
- Goldman Sachs
- J.P. Morgan
- Morgan Stanley
Excellent Merchant Banks
- Barclays Capital
- Credit Suisse
- Deutsche Bank AG
Highly Recommended Merchant Banks
- Jefferies International Ltd
- RBC Capital Markets
- SG CIB
- UBS Investment Bank
Merchant Bank vs Commercial Bank – Differences
The purpose of both the merchant bank and the commercial bank is to make money. But the scopes of both of these banks are quite different. Here are the differences between a commercial bank and a merchant bank –
- Customers: A commercial bank serves the small business owners and the general public. On the other hand, a merchant bank only serves high net-worth individuals and multinational companies.
- Services: Under the scope of services also these two banks are quite different. A commercial bank provides a checking and savings bank account, accept fixed deposits, provide recurring deposits etc. On the other hand, a merchant bank provides underwriting services, fundraising services, financial advising etc.
- Investments: A commercial bank offers loans to the small businesses, but it doesn’t directly invest in clients’ businesses. However, a merchant bank invests directly in the clients’ businesses.
- Transactions: The range of transactions in a commercial bank is quite broad. From a small savings account to offering loans to a business, a commercial bank offers a whole gamut of solutions. For a merchant bank, the range of transactions revolves around a niche area. A merchant bank won’t offer you services until you are a high net-worth individual.
- Making money: A commercial bank makes money by offering loans and earning interest. It also earns money by charging fees for checking accounts, ATM charges, charges on overdrafts etc. On the other hand, a merchant bank makes money via fees they charge their big clients for providing financial services & consultation.
- Effect on the economy: The effect of a commercial bank on the economy is narrow. As a commercial bank serves the general public and deals with small to a large amount, it can only affect the economy of local/regional areas. Its deals with big clients and has a reach in the national & international market. As a result, a merchant bank has a greater impact on the economy of a country.
For mroe details, please have a look at Commercial Banking vs Merchant Banking
Merchant Bank vs Investment Bank – Same or Different?
Often, a merchant bank is called an investment bank. But they’re not same, especially the scope of work for both of these banks are quite different.
The main difference between a merchant bank and an investment bank is the clients they serve.
A merchant bank works with clients that are not big enough to go for initial public offering (IPO) but are privately held. That’s why to helps them in unique ways to raise capital. As for example, we can talk about private placements. Since private placements don’t require a privately held company to disclose as per the Security Exchange & Commission (SEC), it becomes easier for the privately held companies. On the other hand, an investment bank works with huge clients that have the funds large enough to go for IPO and they are large enough to provide time, effort, money to raise the capital through the traditional means. Plus, an investment bank also helps companies in mergers & acquisitions and also provides investment research to the clients.
It may often seem that an investment bank is same because they both serve high net-worth individuals and they both are not open to general public. But as their services are different, they don’t have the same name and same bandwidth. Since there’s a very slight difference in scope, merchant banks and investment banks are often synonymous.
This has been a guide to what is the meaning of Merchant Banks, services offered and list of top merchant banks. We also discuss how they are different from commercial banks and investment banks. You may also have a look at the following recommended articles on Investment Banking –