Bank of Boston Corp. is reportedly negotiating to buy South Boston Savings Bank, the $2.1 billion asset operating unit of Boston Bancorp.
Sources confirmed a report in The Boston Globe that talks were under way, but disputed the Globe's conclusion that a formal bid may be presented this week.
Word of the talks is a further indication that Bank of Boston's well publicized difficulty in closing a merger of equals with a large bank has not stopped it from pursuing smaller acquisitions.
The news comes on the heels of an announcement that Bank of Boston would acquire 93 branches from a failed bank in Argentina.
"They said their strategy is to invest in core businesses where they see growth potential," said Mary Quinn, a banking analyst with Keefe, Bruyette & Woods Inc. in New York.
"The moves they're making simply suggest that in the absence of a merger, they are going to pursue the strategy they have articulated."
The collapse of talks with several potential merger partners, most recently CoreStates Financial Corp., triggered the recent resignation of the bank's chairman, Ira Stepanian.
Analysts said Bank of Boston could achieve cost savings from an in- market deal, but expressed concern that South Boston Savings' securities portfolio was too big for an institutions of its size and criticized the thrift's reliance on mail-order deposits.
