European financial institution that engages in investment banking, counseling, and negotiating in mergers and acquisitions, and a variety of other services including securities portfolio management for customers, insurance, the acceptance of foreign bills of exchange, dealing in bullion, and participating in commercial ventures. Deposits in merchant banks are negligible, and the prominence of such names as Rothschild, Baring, Lazard, and Hambro attests to their role as counselors and negotiators in large-scale acquisitions, mergers, and the like. (2) Part of an American bank that engages in investment banking functions, such as advising clients in mergers and acquisitions, underwriting securities, and taking debt or equity positions. The Federal Reserve permits commercial banks to underwrite corporate debt and common stock deals.