what is merchant banking ?
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Form of banking where the bank arranges credit financing,
but does not hold the loans in its investment portfolio to
maturity. A merchant bank invests its own capital in
leveraged buyouts, corporate acquisitions, and other
structured finance transactions. Merchant banking is a fee
based business, where the bank assumes market risk but no
long-term credit risk. A common form of banking in Europe,
merchant banking is gaining acceptance in the United
States, as more banks originate commercial loans and then
sell them to investors rather than hold the loans as
portfolio investments. A banque d'affaire is a French
merchant bank, which has more powers than its British
counterpart. The Gramm-Leach-Bliley Act allows financial
holding companies, a type of Bank Holding Company created
by the act, to engage in merchant banking activities.
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Answer / ramesh
Financial institution that specializes in services such as
acceptance of bills of exchange, hire purchase or
installment buying, international trade financing, long-
term loans, and management of investment portfolios.
Merchant banks also advise on (and invest own funds in)
acquisitions, mergers, and takeovers. In the US, a merchant
account provider is sometimes called a merchant bank
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