An MB bank, or Merchant Bank, is a financial institution that provides capital for debt or equity financing, typically serving large corporations.
Key Functions of a Merchant Bank:
Merchant Banks offer a variety of services to their corporate clients. These services generally involve complex financial transactions and strategic advice. Here's a breakdown of their primary functions:
- Fundraising: Merchant Banks assist companies in raising capital through various methods, including issuing stocks or bonds.
- Advising: They provide expert financial advice on mergers, acquisitions, and restructurings.
- Underwriting: Merchant Banks underwrite securities, guaranteeing the sale of a certain amount of securities to investors.
- Money Loans: They can provide direct loans to corporations, although this is less common than other forms of financing.
Example Services:
- Initial Public Offerings (IPOs): Helping a company go public by issuing shares on the stock market.
- Mergers and Acquisitions (M&A): Advising and facilitating the merger of two companies or the acquisition of one company by another.
- Debt Restructuring: Assisting a company in reorganizing its debt obligations to improve its financial stability.
In summary, Merchant Banks are crucial players in the financial world, primarily focusing on providing sophisticated financial services to large corporations. They are not to be confused with retail banks, which serve individual customers and small businesses.
