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Finance: What is a merchant bank? 4 Views


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Description:

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.

Language:
English Language

Transcript

00:00

What is a merchant bank? Well there's the theoretical manner

00:08

in which the merchant bank came to the party and that was largely by providing [merchant bank partying in a disco club]

00:12

payment options escrow currency hedges and other means of spraying wd-40 on the [merchant bank holding escrow papers]

00:19

international tracts when American corporations did business with merchants [WD40 sprayed on train tracks]

00:23

from other countries well the basic idea then was that a merchant bank lived and [foreign merchants shaking hands]

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]

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