In a move that will triple its branch network in Argentina, Bank of Boston Corp. said it had acquired 93 offices and $200 million of assets from the failed Banco Integrado Departmental.
"We view it as a one-time opportunity to be able to grow our market share, particularly our deposit base" in Argentina, said vice chairman William J. Shea. "This is a very good opportunity to get additional branches for our franchise at a very reasonable price."
Bank of Boston did not disclose the terms of the purchase, which was approved by the central bank of Argentina as part of an effort to auction off banks that failed in the wake of the Mexican peso devaluation. Banco Integrado was the largest financial institution to be sold in Argentina's banking crisis.
Bank of Boston described the transaction as "not material" in a financial sense, but predicted the acquired branches will provide a platform for expanding the company's retail operations in Argentina, generating increased revenues in future years.
Bank of Boston, which has $45.3 billion of assets, already has 42 offices and $3.6 billion of assets in Argentina, making it the largest foreign bank operating in the country. Banco Integrado's 93 branches will give it the third-largest branch network of any private bank there.
"It makes sense because it gives them a much broader distribution and marketing capability in Argentina," said analyst Ronald I. Mandle, with Sanford C. Bernstein & Co. "It's in keeping with their strategy of growing their Argentine business and becoming an even more important factor in the country's financial system."
The branches acquired by Bank of Boston are primarily located in the Buenos Aires, Santa Fe, and Cordoba provinces in central Argentina. An Argentine bank purchased the remainder of Banco Integrado's 130-office network.
Most of the failed bank's assets will be placed in a trust to be administered by Bank of Boston on behalf of the Argentine government. Banco Integrado had been primarily a retail bank that took consumer deposits and made small-business loans. Bank of Boston acquired $100 million in loans and $60 million in deposits in the transaction.
"It's really a deposit play for us," Mr. Shea said. "Getting good low- cost deposits is something that, from a strategic point of view, we wanted to do."
Low-cost deposits in Argentina and Brazil helped Bank of Boston hold its net interest margin steady in the second quarter, at a time when U.S. deposits had become more costly.
Bank of Boston, which has operated in Argentina for 78 years as Banco de Boston, is primarily known there as a wholesale bank, lending to U.S. multinationals and creditworthy local companies. Improving economic conditions in Argentina, particularly a plunging inflation rate, have recently encouraged the bank to expand its retail presence in the southern cone of the Americas.
"We foresee a very brisk growth rate in the banking sector in future years," said Manuel Sacerdote, Bank of Boston's president and regional manager in Argentina. "We think with this network we'll be able to get the full benefit of this growth rate."
