Finance: What is a merchant bank?

What is a merchant bank, and how many duck puns do we make in this video? Watch it for the answers to both those hard-hitting questions.

College and CareerPersonal Finance
CoursesFinance Concepts
FinanceFinance Definitions
Financial Responsibility
Personal Finance
Finance and EconomicsTerms and Concepts
LanguageEnglish Language
Life SkillsFinance Definitions
Personal Finance
SubjectsFinance and Economics
Terms and ConceptsBanking
Company Management
Credit
Derivatives
Education
Ethics/Morals
Forex
Incorporation
International
Marketing
Regulations
Tech
Trading
Trusts and Estates

Transcript

00:28

breathed the banking international transaction universe and knew every [banks play pong across world map]

00:33

trick in the book when dealing with shady countries who had hoped that they

00:37

could get some gullible American corporation to ship them twenty five

00:42

thousand yellow and orange rubber duckies with the squeaky sound thingies [rubber duckies getting squeezed in the tub]

00:46

yeah and then somehow abscond without paying well the duck seller was schooled

00:52

in molding rubber they were not schooled in international financial transactions

00:57

so back then it made perfect sense for the duck maker to hire the merchant bank [merchant bank enters screen with duck maker]

01:01

to deal with international escrow complexities far beyond their core skill

01:06

and the way they hired them is basically the merchant bank would discount the

01:10

bill that was owed to them and pay that money in cash in American u.s. dollars [money changing hands]

01:15

to that American corporation and the bank would then be responsible for [bank choking international seller]

01:18

collecting the full price and that spread between the full bill and what

01:22

they paid the American company was how they made money well in the process of

01:26

being deep in both the strategic operations of companies in the US and in

01:31

understanding how the global marketplace for Commerce work merchant banks evolved

01:35

into more or less one flavor or another of an investment bank helping clients [merchant bank bulding turns into investment bank]

01:40

sell debt and equity and other money raising devices so that they could

01:45

continue selling ducks or rakes or tractors or lawn flamingo's yeah those [rubber duckies floating by]

01:50

are cute in the modern incarnation of merchant banks while many are actually [merchant bank throws bags of money to businessman]

01:54

able to not just advise but invest in the companies to whom they are close all

02:00

kinds of other complexities live in the border-to-border transactions and [merchant bank sends money to Mexico]

02:05

because the personal relationships of the merchant bankers themselves ended up

02:09

getting so close to the management into the government's they do [group of government officials]

02:13

with into the competitive marketplaces well each of which carried enormous

02:17

friction and merchant banks and the bankers who run them have found

02:21

themselves in the middle of all kinds of commercial transactions yeah very

02:25

lucrative business today people if you want to whine about taxes go into this

02:28

one so today merchant banking is really more

02:31

like just banking with fewer regulations and a whole lot more upside when they're

02:36

right and of course the most successful merchant banks are the ones that you

02:40

know offer merch [merchant bank wearing merch clothes]