The merchant banks

Many merchant banks' date back to the nineteenth century when they were simply merchant houses trading in various parts of the world. Some of these houses grew in reputation and turned to the finance of trade as a specialised business. While the finance of international trade remains an important function of merchant banks other functions have tended to become rather more important. The main activities of the merchant banks are summarised below.

Acceptance business. The principal merchant banks are members of the acceptance Houses Committee and their work consists of accept­ing (i.e. guaranteeing) certain promises to pay issued by merchants engaged in home and overseas trade. In other words they are pro­viding a form of trade credit.

Financial advice to companies. Their best-known activity is the hand­ling of mergers and take-overs. Merchant banks advise and act for the parties concerned, but they will also advise on any aspect of a com­pany's financial affairs.

Share issues. Merchant banks act as Issuing Houses. As well as advis­ing on the method of raising funds they will usually carry out all the work involved in floating a new issue.

Investment managers. In addition to their advisory role, merchant banks will take over the active management of investments on behalf of other institutions and they also operate a number of investment and unit trusts.

Wholesale banking. These banks operate extensively in the Eurocur­rency market, and in wholesale banking (dealings in very large deposits for periods of one year or more).

VIII. Read and retell the following text.

Дата добавления: 2015-07-20