What is Merchant Bank?

Merchant Banks are those which have been mainly financing the domestic and international trade in United Kingdom. During the late 18th and early 19th Centuries the trade between countries was financed by bills of exchange by well reputed merchant houses for which they would charge a commission for their service. Thus the business of excepting bills of exchange to finance the trade developed and gradually this business houses entered into other banking activities and became known as Merchant Banks.

Since all the commercial banks,in addition to other banking functions also deal in trade financing the term merchant banks has been gradually faded away.