Merchant banks are financial institutions that provide a range of specialized services to businesses and high-net-worth individuals. Unlike commercial banks that offer standard banking services to retail customers, merchant banks cater primarily to corporate clients.
In this comprehensive guide, we will explain merchant banking and the unique financial services they provide. We’ll review the six merchant banks in Nigeria and the tailored offerings they provide, from trade financing to advisory services.
We will also explain the process of opening an account with a merchant bank, including the eligibility requirements. If you’re directly interested in leveraging merchant banking services or simply want to learn more about them, this informative article will equip you with everything you need to know.
What Is A Merchant Bank?
A merchant bank is a special kind of bank that offers a variety of services such as underwriting, loan provision, financial advising, and fundraising for large corporations and high-net-worth individuals (HNWIs).
The difference between Merchant banks and commercial banks like GTBank, First bank, Zenith bank is that they do not cater to the general public. They also differ from investment banks in that they focus on private companies rather than public ones.
Also known as investment banks or boutique banks, merchant banks provide a wide range of financial services to businesses and corporations.
Their focus on serving the needs of large corporations, governments, and high-net-worth individuals sets them apart from traditional commercial banks, which primarily serve the general public.
Services Offered by Merchant Banks
A merchant bank offers various important services to big companies and wealthy individuals. Here are some key things they do:
- Helping Companies Raise Money: They help companies raise money by issuing stocks or bonds. They also advise on mergers, acquisitions, and other money-related deals.
- Pricing New Securities: They find out the right price for new stocks or bonds before they are sold to the public.
- Giving Financial Advice: They offer advice on how companies should organize their money and make big financial changes.
- Managing Investments: Some merchant banks take care of big investment accounts for companies or rich people.
- Investing in Private Companies: They might invest in and help manage private companies.
- Managing Risks: They help companies deal with financial risks, like changes in interest rates or currency values.
- Helping with International Trade: They provide financial help for companies doing business internationally.
- Managing Wealth: They help rich individuals with their investments and planning for the future.
It’s important to know that the term “merchant bank” can mean different things in different places. In some countries, it’s about banks that historically focused on international trade finance, while in others, it’s the same as investment banking. The services provided by merchant banks can change based on the rules and the market in each place.
List of Merchant Banks in Nigeria
- Coronation Merchant Bank
- FBNQuest Merchant Bank
- FSDH Merchant Bank
- Greenwich Merchant Bank
- Rand Merchant Bank
- Nova Merchant Bank.
Coronation Merchant Bank
Coronation Merchant Bank has a rich history and has been a significant part of the Nigerian economy since 1993. It originated from Associated Discount House Limited (ADHL) and has evolved into a leading force in the Nigerian banking industry.
The bank has shown consistent growth and resilience, overcoming industry challenges and seizing opportunities for advancement.
Features
- Offering innovative solutions for organizations to trade across borders with ease.
- Providing a suite of corporate banking solutions leveraging extensive market knowledge and expertise.
- Delivering best-in-class strategic financial advisory services to corporate and government agencies.
- Providing clients with liquidity management through a variety of products and service offerings.
FBNQuest Merchant Bank
FBNQuest Merchant Bank, previously known as Kakawa Discount House, is a top corporate and investment banking institution licensed by the Central Bank of Nigeria. They provide a wide range of financial products and services to clients in specific sectors of the economy. As part of the FBNHoldings Group, they have a strong financial capacity and a rich heritage.
Their services cater to the needs of corporate, government, institutional clients, and high net-worth individuals. These services include financial advisory, investment and wholesale banking solutions, investment management, and facility agency services.
Since their establishment in 2015, they have established a strong market presence and received numerous awards. They aim to create sustainable value for all their stakeholders and focus on building a lasting legacy for future generations.
FBNQuest Merchant Bank’s offerings include Coverage and Corporate Banking, Investment Banking, Agency Services, Fixed Income, Currencies, and Treasury businesses. They emphasize personalized solutions and use cutting-edge technology to enhance customer experience.
For those interested in investing, funding ventures, or seeking advice on wealth preservation, FBNQuest Merchant Bank has a world-class team ready to understand individual requirements and create customized solutions for a brighter financial future.
Features:
- A broad range of services: Investment banking, corporate banking, fixed income, currencies & treasury, wealth management, and agency services.
- Strategic partnership approach: They emphasize working closely with clients to understand their needs and create customized solutions.
- Global reach: Access to international markets and expertise.
- Experienced team: World-class team with a strong track record.
- Digital presence: Online resources and tools, although the extent of digital banking services isn’t fully clear from the provided information.
FSDH Merchant Bank
FSDH Merchant Bank is a leading merchant bank in Nigeria with a history spanning over three decades. As a subsidiary of FSDH Holding Company, it offers a range of financial services and operates alongside its Asset Management and Capital businesses, as well as its technology incubator, Vested.
The bank’s journey began with the incorporation of First Securities Discount House Limited in 1992, which later evolved into FSDH Merchant Bank Limited, one of the first companies to be granted a merchant banking license in Nigeria. Following the restructuring of the banking sector by the Central Bank of Nigeria in 2009, FSDH adapted to the new framework and expanded its operations while maintaining a focus on core activities.
FSDH Merchant Bank prides itself on delivering expert financial services within Nigeria and select clientele, aiming to create long-term sustainable wealth. In 2012, the Central Bank of Nigeria granted the bank its Merchant Banking License, solidifying its position as a key player in the Nigerian financial services sector.
Features:
- Diverse services: Business banking, corporate banking, prestige banking, treasury & global markets, and global custody.
- Expertise: Trained teams managing credits, liabilities, and liquidity for clients locally and internationally.
Greenwich Merchant Bank
Greenwich Merchant Bank (GMB) is a distinguished merchant bank headquartered in Lagos, Nigeria, offering high-end financial products and services to select clientele in targeted sectors of the economy. The bank’s focus areas include corporate banking, investment banking, asset & wealth management, treasury & global markets, securities trading, and private banking.
GMB’s strategy revolves around building strong relationships and professionally delivering top-class products and services, leveraging cutting-edge technology to drive speed, and efficiency, and enhance customer experience. The bank is committed to creating sustainable value for stakeholders and aims to build an enduring legacy for future generations.
The bank’s website also highlights its investment offerings, such as the Alpha ETF and Nigerian Entertainment Funds, showcasing its commitment to providing diverse investment opportunities to its clientele.
Furthermore, GMB has received recognition in the form of awards and has been involved in significant financial transactions, such as assisting in raising funds for infrastructure projects.
Features:
- Diverse financial services (corporate banking, investment banking, wealth management, etc.)
- Client-centric approach with tailored solutions
- Investment opportunities (ETFs, specialized funds)
Rand Merchant Bank
Rand Merchant Bank (RMB) is a leading African Corporate and Investment Bank, offering a comprehensive suite of investment banking products and services. As a subsidiary of the FirstRand Group, RMB Nigeria is licensed by the Central Bank of Nigeria and provides advisory, finance, and trading solutions, as well as investment opportunities and fund management.
RMB’s culture is characterized by an owner-manager ethos, collaborative spirit, and strong values, setting it apart from other Corporate and Investment Banks. The bank is committed to creating opportunities for exceptional individuals, fostering an environment where their potential can be realized and the norm can be challenged.
RMB’s programs, such as the Minds that Matter Graduate Program and the COUNT CA Experience, aim to attract and develop bright minds in various fields, including transacting, credit analysis, accounting, and IT. Additionally, RMB is dedicated to promoting gender diversity and collaborates with LinkedIn to recruit world-class talent for the bank.
The bank’s presence extends beyond Nigeria, with operations in South Africa, Botswana, Namibia, the UK, India, the USA, and other countries. RMB’s commitment to excellence, innovation, and sound banking principles makes it a brilliant place to work and a trusted partner for its clients.
Features:
- Diverse investment banking services (advisory, finance, trading, fund management)
- Global reach across multiple countries
- Talent development programs to attract top performers
- Committed to diversity and inclusivity
Nova Merchant Bank
Nova Merchant Bank is a leading financial institution that offers a wide range of innovative and impactful financial services. With a strong focus on customer satisfaction and sustainable growth, Nova Merchant Bank has established itself as an investment-grade-rated merchant bank, recognized for its exceptional service and forward-thinking solutions.
Features:
- Wide range of financial services (corporate banking, investment banking, wealth management, etc.)
- Impact-driven philosophy (“New Thinking, New Opportunities”)
- Experienced team & strong media recognition
- Provides research & market insights
- Offers various mutual funds & stock market updates
- Committed to sustainability
How to Open an Account in a Merchant Bank in Nigeria
Here are the steps to open a merchant bank account in Nigeria:
- Collect valid identification, proof of address, and business registration documents.
- Go to the merchant bank’s branch where you want to open the account.
- Ask the bank staff for the account opening forms.
- Fill out the forms with accurate information. Provide details such as personal information, business details, and the purpose of the account.
- Submit the completed forms along with the necessary documents requested by the bank. This may include your ID, proof of address, and business registration papers.
- Be prepared to deposit the required initial amount into the account. The bank will specify this amount based on the type of account you are opening.
- Take time to review the terms and conditions of the account. Seek clarification on any aspects you may not understand.
- After verification of your documents and completion of necessary checks, the bank will confirm the account opening. Your account will then be activated.
Remember, each bank may have specific requirements, so it’s advisable to contact the bank or visit their website for precise information tailored to their processes.
What is The Difference Between a Bank And a Merchant Bank?
In essence, the primary distinction between a commercial bank and a merchant bank lies in their focus and functions within the financial landscape.
A commercial bank, governed by regulations such as the Banking Regulation Act, of 1949, caters to the general public by providing fundamental banking services like accepting deposits and extending credit. Its revenue sources predominantly include interest earned from various loans and fees charged for services like ATM card issuance and checking account maintenance.
On the other hand, a merchant bank, operating under the regulations framed by entities like SEBI (Securities and Exchange Board of India), specializes in offering financial advisory services to high-net-worth individuals and multinational corporations.
Unlike commercial banks, merchant banks generate their primary earnings through fees for advisory services, managing investments, and making strategic capital investments in growing companies.
While commercial banks play a crucial role in the local economy by facilitating loans for home purchases and startups, merchant banks impact larger corporations and the national economy by influencing stock market prices through strategic investments. In summary, commercial banks act as financiers with a local economic impact, while merchant banks operate as financial advisors with a broader, corporate-focused influence.
Conclusion
Merchant banks play a vital role in the Nigerian financial system, supporting the growth of businesses and the overall economy. They offer specialized services like corporate finance, investment management, and advisory support, catering to corporations, high-net-worth individuals, and government entities.
Understanding their functions, significance, and impact can help us appreciate their contribution to facilitating trade, investment, and capital formation in Nigeria. As the Nigerian financial landscape evolves, merchant banks are likely to continue adapting and innovating to meet the changing needs of the market.