SAO PAULO - Bank of Boston Corp. said it plans to open at least 10 more branches in Brazil as part of a program to develop a broader range of customers there.
Henrique de Campos Meirelles, country manager for Bank of Boston's operations in Brazil, said the bank will expand into the corporate middle market and will add personal banking customers outside its current market.
Bank of Boston hopes to increase the number of its middle-market corporate customers over the next three years from around 600 today to 3,000, and to increase the number of personal banking customers from 30,000 to 70,000.
The middle market in Brazil covers businesses with annual revenues less than $40 million. Until now, the bank has focused mainly on companies with $40 million to $50 million in revenue, as well as those with more than $150 million.
At the same time, the bank hopes to raise its profile with retail customers who have less than $48,000 in annual household income.
The planned expansion is Bank of Boston's third recent move in Latin America, where it has $8 billion of its $44.6 billion of assets. In May the bank opened a subsidiary in Bogota, Colombia, and in August it acquired 93 branches from Argentina's Banco Integrado Departamental.
Mr. Meirelles said Bank of Boston has already selected eight locations for its new branches. Five are in Sao Paulo, two are in Rio de Janeiro, and one is in the southern city of Curitiba. The bank will spend about $2 million to open each branch.
Bank of Boston has $3.4 billion in assets and 26 branches in Brazil. Twenty-one branches are owned directly by Bank of Boston. The other five belong to Banco de Boston SA, a locally licensed investment banking subsidiary.
Bank of Boston has rapidly enlarged its activities in Brazil, where as recently as 1984 it had only $100 million in assets. Mr. Meirelles acknowledged that the bank was taking on more risk by dealing with a wider range of customers, but he insisted that any risks are manageable.
"Our experience says everything is proportional," Mr. Meirelles said. "If you lend to large companies, you have to do a lot of in-depth analysis and develop tailor-made products. Even if your volumes are larger, your costs are also higher - and your rates are lower."
With smaller companies, he noted, the amounts may be smaller but "you diversify your risks, you tend to deal more with standardized products, you get higher rates, and your costs per credit are lower."
To ease the transition to these new market niches, Bank of Boston launched a pilot program two years ago in Brazil, hiring specialists to evaluate credit analysis, special products, and operations.
As part of a step-by-step move into new consumer market segments, the bank is launching a "one product" program, under which it will, for example, minimize risks by extending only a limited range of services to lower-income customers.