merchantbank

Merchant bank, or merchant banking, refers to a specialized set of financial services provided to corporations and high-net-worth clients, focusing on capital formation, corporate finance, and strategic advisory rather than ordinary retail banking. Merchant banks typically do not operate as traditional deposit-taking banks and are oriented toward large or complex transactions.

Core activities include underwriting and placement of securities, loan syndication and debt financing, mergers and acquisitions advisory, private placements, project finance, venture capital and mezzanine financing, as well as asset management and treasury advisory for corporate clients. They may also offer issue management for public offerings and help with corporate restructurings, privatizations, and capital-raising strategies.

Historically, merchant banking emerged in Europe as financiers of trade and commerce. In the 20th century, these banks specialized in corporate finance, underwriting, and advisory services, particularly in the United Kingdom and other advanced markets. Over time, regulatory developments and market consolidation led many merchant banks to evolve into or be absorbed by broader investment banking franchises, while the distinct label has faded in some jurisdictions.

Regulation and regional variation shape the term. In some countries, such as India, merchant bankers are a defined category of financial intermediaries regulated by securities authorities, with licensed activities including issue management, underwriting, and portfolio management. In other markets, activities once carried out by merchant banks are now performed by investment banks or private equity firms. Overall, merchant banking remains a niche focused on corporate finance rather than consumer banking.