(b) Commercial Banks A commercial bank is a type of bank that provides services such as accepting deposits, making business loans, and offering basic investment products. Functions of Commercial Banks There are two essential functions that a financial institution must perform to become a bank. These are primary and secondary functions. Primary functions (a) Accepting deposits b) Making advances c) Credit creation Secondary functions (a) Clearance of cheque b) Transfer of money c) Sale/purchase of shares/bonds d) To work as trustees e) To work as a representative f) To give/accept money g) To provide letter of credit (c) Merchant Bank According to the Nigerian Banking Amendment Decree (No) of 1979, merchant bank means any person in Nigeria who is engaged in wholesale banking, medium and long- term financing, equipment leasing, debt factoring, investment management, issue and acceptance of bills and the management of unit trust. They are also called Acceptance Houses or Discount Houses. A merchant bank deals with the commercial banking needs of international finance, long-term company loans, and stock underwriting. This type of bank does not have retail offices where a customer can go and open a savings or checking account. It is sometimes said to be a wholesale bank, or in the business of wholesale banking because these banks tend to deal primarily with other banks of the same kind, as well as large financial institutions. In the USA, for instance, merchant banks are known as investment banks The Functions of Merchant Banking The Functions of Merchant Banking are listed as follows ab Raising finance for clients Merchant banking helps its clients to raise finance through issue of shares, debentures, bank loans, etc. It helps its clients to raise finance from the domestic and international market. b) Broker in stock exchangeMerchant bankers act as brokers in the stock
269 exchange. They buy and sell shares on behalf of their clients. They conduct research on equity shares. c)
