BankBoston Corp., continuing to focus on its most profitable businesses,has begun to prune processing services from its private banking menu.

The $71 billion-asset banking company has agreed to shed what it calls low-margin, technology-intensive custody and processing operations, and it said it will rechannel its energies into boosting assets under management.

Last week, BankBoston said it would sell its U.S. institutional custody and processing businesses to Boston-based Investors Financial Services Corp. for $50 million. The deal affects $45 billion of assets held for 600 institutional customers, the bank said.

The sale is slated to close Sept. 30, pending regulatory approval.

Investors Financial, which specializes in custody and administration services through its subsidiary, Investors Bank and Trust, will in turn do custody work through an outsourcing arrangement on the assets managed by BankBoston.

"We get to redeploy our resources to our area of focus," said Guilliaem Aersten 4th, BankBoston's executive vice president for U.S. private banking.

"We felt that at this point, it would be better for our clients to have that business handled by a company that really specialized in custody," he said.

During the last 18 months, the banking company has selectively shed businesses it deemed not profitable enough to continue. That includes two consumer finance units, Ganus Credit Corp. and Fidelity Acceptance, and a stake in a mortgage company, HomeSide Inc.

Custody is one business that many banks have been leaving for lack of scale, consultants said.

"Banks are making the choice whether to use their capital to cover low- margin fiduciary assets or whether to apply capital to higher- profit businesses like asset management," said Geoffrey Bobroff, a consultant in East Greenwich, R.I.

Indeed, BankBoston said it would use the proceeds of the sale to help boost assets under management in its U.S. private bank. Currently, the unit has $25 billion under management. This total does not include the 1784 Funds, which are managed in another unit of the company.

Mr. Aersten said he would focus on drumming up sales and improving service for existing customers.

Investors Financial said it would hire all 106 BankBoston employees affected by the sale and would move their operation from Canton, Mass., to its headquarters in downtown Boston.

"This transaction represents an expansion of a successful, long-term business relationship," said Kevin J. Sheehan, chairman and chief executive officer of Investors Financial.

The company, which has long done processing for the 1784 Funds, expects to boost its custody assets to $234 billion with the purchase, said a spokeswoman.

The agreement with Investors Financial also extends a lengthy relationship between the two companies in Latin America.

BankBoston, which has already been doing local custody work for Investors Financial's clients in Brazil and Argentina, has agreed to expand those services to other Latin American countries.

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