Merchant banks are not your regular retail banks. They specialize in large-scale financial services for corporations and wealthy individuals — think private equity, underwriting, trade finance, and strategic advisory for mergers and acquisitions.
Unlike investment banks that primarily deal in public markets, merchant banks often invest their own capital directly into companies. If a promising startup needs $50 million to expand, a merchant bank might provide it from its own funds rather than arranging public offerings.
Historically, merchant banking originated in medieval Italy and the Netherlands with families like the Medicis financing international trade. Today, firms like Lazard and Rothschild continue this tradition. In India, ICICI Securities and SBI Capital Markets are prominent merchant bankers.