Dictionary of Banking Terms: merchant bank
merchant bank
- credit card processing bank that purchases bank card sales drafts from a retail merchant. The merchant processor converts the merchant's sales drafts to deposits, and collects a processing fee called a merchant discount. If the transaction was initiated by a customer at another bank, the merchant bank submits the sales draft information through the bank card interchange system, collecting the amount of the draft, less the interchange fee, from the card issuing bank. See also merchant discount rate.
- European or British investment bank that engages in merchant banking.
Dictionary of Business Terms: merchant bank
merchant bank
- financial institution that engages in investment banking, counseling, negotiating in mergers and acquisitions, and a variety of other services.
- bank that has entered into an agreement with a merchant to accept deposits generated by bank credit/charge card transactions.
Dictionary of Finance and Investment Terms: merchant bank
merchant bank
- European financial institution that engages in investment banking, counseling, and negotiating in mergers and acquisitions, and a variety of other services including securities portfolio management for customers, insurance, the acceptance of foreign bills of exchange, dealing in bullion, and participating in commercial ventures. Deposits in merchant banks are negligible, and the prominence of such names as Rothschild, Baring, Lazard, and Hambro attests to their role as counselors and negotiators in large-scale acquisitions, mergers, and the like.
- part of an American bank that engages in investment banking functions, such as advising clients in mergers and acquisitions, underwriting securities, and taking debt or equity positions. The Federal Reserve permits commercial banks to underwrite corporate debt and common stock deals.
- American bank that has entered into an agreement with a merchant to accept deposits generated by bank credit/charge card transactions.
