Merchant bank
A financial institution specialising in corporate finance activities such as underwriting, capital raising, mergers and acquisitions advisory, and trade finance for corporate and institutional clients.
Institutional Definition: A merchant bank provides structured financial services to commercial entities, including the underwriting and placement of equity and debt instruments. Unlike retail banks, merchant banks do not offer consumer accounts; their function is centred on corporate finance, advisory work, and capital formation. They act as an intermediary between businesses seeking capital and the institutional investors supplying it.
Technical Context: In the United Kingdom, merchant banks operate within the corporate finance regulatory environment overseen by the Financial Conduct Authority (FCA). Their activities involve coordination with institutional investors, issuers, and international trade bodies, often requiring cross-jurisdictional compliance and detailed due diligence.
Core Competencies
Underwriting
The assumption of temporary financial risk to support the issuance and placement of new equity or debt securities.
M&A Advisory
Strategic advisory services covering valuation, negotiation, restructuring, and regulatory coordination for corporate transactions.
Trade Finance
The facilitation of international commerce through instruments such as letters of credit and structured financing to mitigate payment risk.