Documente Academic
Documente Profesional
Documente Cultură
Learning Objective
Nature and
banking
function.
The
word
Merchant
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Corporate Counseling
Project Counseling
Venture Capital
Financial Engineering
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Loan Syndication
IBs arrange to tie-up loans for their clients.
Cash flow analysis and requirements
Important loan parameters include amount, currency, tenure,
amortization.
Prepares loan memorandum, circulated to various banks and invited
for syndication.
Banks decide the amounts and interest rates.
Loan documentation process.
Venture Financing
VC business evolved from individuals to institutionalized
sector.
Number and size of deals increasing.
Returns are expected more.
Private Equity
Stages of VC, then PE
Company becomes profitable, establishes track record.
Exit with IPO
M&A
Increased M&A activities.
Pre-liberalization era, M&As in unrelated areas
Post liberalization era, M&As growth, consolidation in core
competence.
Advisory on acquisitions
Financial; Tax shields like carried forward losses or unclaimed
depreciation
Marketing: Growth in market share, eliminating competition
Production: Horizontal or vertical integration
Financial Engineering
Design new financial products, develop superior processes and
implement structured solutions to complex financial problems.
The factors accelerated the financial innovations
Interest rate volatility
Exchange rate volatility
Asset price volatility
Regulatory and Tax changes
Globalization of the markets
Increased competition
Merchant Banking
Other Functions of Merchant Banks
Accepting Credit and Bill Discounting
Lease Financing
Foreign Currency Finance
Pre-investment Studies
Capital Restructuring
Portfolio Management
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Above Rs. 100 Crore but less than Rs. 200 Crore
Above Rs. 200 Crore but less than Rs. 400 Crore
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7. Current Development
Business of MB is undergoing rapid transformation in
response to the growing sophistication in the financial
markets and the needs of clients. Consolidation and
globalization is the key for success and growth. Financial
conglomerates with equal presence in commercial
banking, investment banking, insurance and financial
advisory are the way to go for one-stop shopping for all
financial needs. Most US universal banks are shaping up
to be financial conglomerates that would eventually
threaten the supremacy of pure investment banks on Wall
Street.
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7. Current Development
Future therefore lies in full service investment banking
comprising of core investment banking (managing and
underwriting security issues of all types, M&A advisory),
asset management (mutual funds, portfolio management,
private banking), private equity and venture capital,
brokerage, sales and distribution, research and analysis,
proprietary trading and investment, primary dealing in
fixed income securities, structured financing and
corporate advisory services. Universal banks can add all
their banking products in both corporate and retail
banking segments to the long list of services offered as full
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7. Current Development
A step forward would be the financial conglomerates of the
future that can even add on insurance and pension
products to make them one-stop financial shops. Large
financial conglomerates such as the Citigroup or ING
would be the models of growth in the years to come.
*****
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