The origins of the present day merchant banks are similar to those of the private country banks in that their founders were merchants but they traded overseas rather than in the home country.

These banks like commercial banks offer banking services such as current, deposit and fixed or time deposit accounts.

They differ from the commercial or clearing banks principally in that they have few, if any, branches and are mainly wholesale banks, accepting large sums of deposit chiefly for fixed terms.

Their customers are financial institutions, companies and individuals with large sums of money. When they lend, the merchant banks usually lend to companies and for medium and long periods of time.

Unlike the commercial banks, they may purchase shares in a company which is their customer and play a direct part in the company's management.

They assist their company customer to find suitable sources of finance often by arranging to sell or issue the company's shares to the member of the public and to obtain stock exchange quotations for the shares.

Merchant banks also advise and assist companies ranging from making a rights issue under the terms of which stockholders are offered additional shares at an attractive price. Some merchant banks act as company registrars.