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What are the differences between commercial, investment and merchant banks?

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Question added by Bassem Al-Ahmad , Financial Director , ADR
Date Posted: 2014/03/24
Divyesh Patel
by Divyesh Patel , Assistant Professional Officer- Treasury , City Of Cape Town

Commercial Bank

A commercial bank is defined as a bank whose main business is deposit-taking and making loans. This contrasts with an investment bank whose main business is securities underwriting, M&A advisory, asset management and securities trading.

 

Merchant Bank

Merchant banks primarily perform international financing activities such as foreign corporate investing, foreign real estate investment, trade finance and international transaction facilitation.

 

Investment Bank

Investment banks underwrite new debt and equity securities for all types of corporations. Investment banks also provide guidance to issuers regarding the issue and placement of stock.

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