The two establishments in operation until that time in the state capital and in the port city of Santos were branch offices of Banco do Brasil and the English Bank of Rio de Janeiro. The January 3, 1873 issue of the Jornal do Commercio newspaper, in a retrospective overview of the preceding year, reported on the bank's stock distribution in Rio de Janeiro:

“Banco Mercantil de Santos — By an initiative of the Banco Industrial e Mercantil do Rio de Janeiro and some businessmen in Santos, a prospectus for this bank was presented in Rio de Janeiro on August 1, contemplating a capital stock of 2,000 contos de réis [currency] represented by 10.000 shares of 200 thousand réis. The bank's main office will be located in Santos. In the last quarter of the year, a number of stock certificates emerged in Rio de Janeiro and were traded at a discount of 2,000 réis to par value, in cash."

Despite going public in the metropolis, the new bank followed clearly regional principles. According to its bylaws, its purpose was to promote progress and enhance trade in the Province of São Paulo. In that same year, the first railway of the Companhia Paulista de Estradas de Ferro was opened, joining the cities of Jundiaí and Campinas. Not by chance, the 1870s were a prodigal decade in the expansion of Brazil's railroad frontier, with the creation of the Ituana, Sorocabana and Mogiana railway companies, implanted mostly with locally acquired financial resources.

The Banco Mercantil de Santos applied a policy of investing its reserves in bonds of the Brazilian Empire quoted in London, but at one point in 1880, one third of its investments were allocated to Sorocabana debentures. The bank advanced over the years. By 1885, it operated branch offices in São Paulo at the Travessa do Colégio (the street currently known as Rua Anchieta, in the neighborhood of Casa Verde in the northern zone of the city); in Campinas; and in Rio. It had correspondents in Portugal and European cities including Hamburg, London and Paris. The bank's prestige was such that in 1889, only 11 days after the Empire ended and the Republic was proclaimed, it was authorized to issue currency under decree 13, signed by Deodoro da Fonseca (the first Brazilian president) and (Minister of Finance) Ruy Barbosa, a privilege granted only to a small handful of institutions. Soon after, during the market delirium known as the Encilhamento, the Mercantil de Santos increased its capital by 400% via public subscription.

São Paulo's first bank survived for three decades. In 1902, it succumbed to the financial supervision and sanitation policies of Joaquim Murtinho, the Minister of Finance under Campos Salles. In the wake of a series of bank runs and a wave of collapsing financial institutions, the Banco Mercantil de Santos filed for bankruptcy and was liquidated two years later.