Merchant Banks

Merchant banks are financial institutions that offer a wide range of financial services, which include the facilitation of short-term, medium-term, and long-term loans, provision for sizeable deposits, management of bills, and engagement in stock dealings. These banks cater to the financial needs of both individuals and businesses.

They help in business expansion, capital generation, and financial empowerment for individuals and enterprises alike.

• Central Bank
• Commercial Banks: Functions, Accounts, and Credit Facilities
• Cheques

Functions of Merchant Banks

As indicated above, merchant banks offer sizable financial services to their customers. We are going to examine some of these financial services further.

1. Loan Provisions: Merchant banks offer different types of loans to their customers to cater to diverse durations. The loans can be short-term, medium-term, or long-term.
2. Deposit Management: These institutions actively welcome and manage substantial deposits from their clientele. They provide a secure and reliable avenue for individuals and businesses to entrust their funds.
3. Bill Management: These banks manage bills. They also assist clients in the handling, processing, and settlement of financial instruments.
4. Share Sales: They assist in the sale of shares to the public. They facilitate the process that enables individuals to invest in companies through stock trading.
5. Merger Advisory Services: Merchant banks provide guidance and arrangements for the merging of firms. Their expertise aids businesses in navigating mergers.
6. Financial Expertise: They offer valuable financial advice and expertise to their clients. This guidance assists individuals and businesses in making informed financial decisions for optimal financial outcomes.
7. Issuing House Services: Merchant banks act as issuing houses. They provide expert advice to clients on strategies to raise new capital.
8. Equipment Leasing Services: These banks assist customers in enhancing their cash flow by offering equipment leasing services. This allows businesses to access necessary equipment without substantial upfront costs, thereby optimising their operational efficiency.
9. Real Estate Financing and Advisory: They extend financial support and offer guidance in real estate ventures. Their involvement ranges from financing real estate projects to providing valuable advisory services.
10. Foreign Transactions and Letters of Credit: They engage in international financial transactions. They facilitate foreign dealings involving letters of credit.

Examples of Merchant Banks in Nigeria

The following are merchant banks in Nigeria recognised by the CBN:

1. NOVA Merchant Bank
2. FSDH Merchant Bank
3. FBN Quest Merchant Bank
4. Rand Merchant Bank
5. Coronation Merchant Bank