Bank of Boston Corp. will continue its hunt for an acquisition in Latin America despite last week's decision to pull out of the bidding for Brazil's Banco do Estado do Rio de Janeiro SA.

"Brazil is one of the countries we are most interested in expanding in," said John Kahwaty, head of investor relations at Bank of Boston.

"Activity in that market will only get hotter, and we intend to maintain our competitive edge."

The decision to back away from its pursuit of the Rio bank, known familiarly as Banerj, marks the third time this year Bank of Boston has pulled out of a deal for a Latin bank.

It also illustrates just how difficult it can be for a U.S. institution to find an acquisition that will fit its strategic priorities.

An earlier bid to acquire Argentina's Banco Integrado Departamental along with 93 branches fell apart after the Argentine government reversed its approval for the deal. Earlier this year, Bank of Boston also pulled back from bidding on Banco Meridional do Brasil SA, another failed Brazilian bank.

Mr. Kahwaty acknowledged that it was sometimes "hard to reconcile" Bank of Boston's ambitions with either the structure of the institutions that came up for sale or conditions of the sale.

He emphasized, however, that Bank of Boston has no plans to lower its own conditions just to buy a bank in Latin America.

"Our M&A people are working full time, but we're very disciplined when it comes to pulling the trigger," he said.

The $62 billion-asset Bank of Boston has 26 branches and more than $3 billion in assets in Brazil. Analysts noted that although the bank is well placed to take advantage of opportunities as they come up, it remains reluctant to rush through an acquisition that it might later regret.

"They have an opportunity to look, so they are looking," said Henry C. Dickson, a bank analyst with Smith Barney Inc.

"But they also want something that adds to their franchise and isn't going to create too much asset risk for them."

Bank of Boston runs the third-largest international network among U.S. banks, with 100 offices in 24 countries, and is also one of to run commercial and consumer banking operations outside the United States.

The bank has been steadily expanding in Latin America, but it has been looking to acquire a bank in Argentina and Brazil to expand distribution of retail and middle-market banking services and fast-growing mutual funds.

In a brief statement released in Sao Paulo last week, Bank of Boston said that it was pulling out of the bidding for Banerj after a closer exam found that the bank's customer base and branch network in the state of Rio De Janeiro did not meet its strategic needs.

Bank of Boston, which just opened a third branch in Rio De Janeiro, added that expanding in the Brazilian state remains a priority.

According to Bloomberg News Service, four other institutions, including GE Capital Services Corp., also pulled out of the bidding for Banerj. Illustrating the difficulties inherent in acquiring a foreign institution, a local judge Tuesday halted the sale of Banerj pending an inquiry into the sale's constitutional status.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.