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Slide 1 - Banco Itaú - Feito Para Você

VIEWS: 8 PAGES: 19

									              ACQUISITION OF BANKBOSTON’S
              OPERATIONS IN LATIN AMERICA




May 2, 2006


                                            1
The Acquisition Agreement
Banco Itaú Holding Financeira S.A. (ITAÚ) and Itaúsa – Investimentos Itaú
S.A. (ITAÚSA) announce today that they have entered into an agreement with
Bank of America Corporation (BAC) dated 05-01-2006 which involves:
    • The acquisition of BankBoston (BKB) in Brazil by ITAÚ pursuant to the
    issuance of 68,518 thousand new non-voting ITAÚ shares, equal to an
    approximate 5.8% share of ITAÚ’s total capital;
    • The exclusive right for ITAÚ to acquire BKB’s operations in Chile and
    Uruguay, as well as certain other financial assets owned by clients of
    Latin America.

                           The largest stock swap ever
                             to be completed in the
                                Brazilian financial
                                services industry


                                                                              2
Acquired Businesses

                        Bank of America
                          Corporation
      Option                               Option     Option



    BKB                     BKB               BKB     OCA Uruguay
    Chile                   Brazil          Uruguay    Credit Cards




                           Middle
            Corporate        &            Premier
                           Small


                                                                      3
Price and Transaction Structure

  The acquisition of BKB Brazil will be effected in stock pursuant to the
 issuance of non-voting ITAÚ shares, equal to an approximate 5.8% share
 of ITAÚ’s total capital (68,518 thousand new shares of ITAÚ). Based on the
 non-voting shares average price on 04-28-06, these newly-issued shares
 would be valued at R$ 4.5 billion.



  The same transaction structure is expected for the remaining
 acquisitions and the amounts involved will be generally in line with their
 respective asset bases vis-à-vis BKB Brazil.



                                                                              4
Recent Acquisitions in Shares in Brazil

                                                              TOTAL                  SHARES
                                                                        % PAID
     DATE                     ACQUIRER       TARGET          AMOUNT               ISSUED / TOTAL
                                                                      IN SHARES      CAPITAL
                                                              R$ MM

    Apr-03             ABN Amro Real     Sudameris            2,293     77.0%         12.9%

    Jan-03             Bradesco          BBV Brasil           2,480     25.4%         4.4%

    Nov-02             Itaú              BBA-Creditanstalt    3,119     16.7%         3.0%

     Jul-00            Unibanco          Bandeirantes         1,044    100.0%         12.3%

    Apr-00             Bradesco          Boavista             946      100.0%         6.5%



    May-06             Itaú              BKB Brazil           4,508    100.0%         5.8%


      Source: Merrill Lynch

                                                                                                   5
Considerations Regarding BAC’s Investment in ITAÚ

  BAC will appoint one member of ITAU’s Board of Directors;
  The acquisition will involve the issuance of new non-voting ITAÚ shares, will not give rise
 to preemptive subscription rights on the part of ITAÚ’s current shareholders;
  BAC does not have a Right of First Refusal, but will have tag along rights, in the event of
 a change of control at ITAÚ;
  BAC shall not increase its stake above 20% of the issued and outstanding capital of
 ITAÚ in the future;
  Shares issued in connection with this acquisition are subject to a 3-year lock-up period
 and, after this period, the sale of these shares in the market is limited to 15% of the average
 daily volume or block trade;
  ITAÚ has a Right of First Offer should BAC decide to sell its stake.



                                                                                                   6
BKB Brazil

                                                                             Ranked 13th
                                                                            by the Central                          Market
                                                                            Bank of Brazil               12-31-05   Share

                                             Assets (R$ MM)                                              22,603      1.4%
                                             Loans (includes sureties and endorsements) (R$ MM)           11,639     1.4%
                                             Deposits (R$ MM)                                             5,911      0.6%
                                             Assets under Management (R$ MM)                              26,014     3.3%
                                             Shareholders’ Equity (R$ MM)                                 2,124
                                             # of Employees                                               4,800
   Present in Brazil since 1947              # of Clients (thousands)                                      203
                                             # of Branches                                                  66
       Source: BKB Publication, BAC, Central Bank of Brazil and Market Share taken from ANBID – Mar/05
                                                                                                                             7
  BKB Brazil - Segmentation

           Banking Revenues (BR) (*)                                                 Number of Clients

High Net Worth
                                                                                      THOUSANDS INCREASE
  Individuals                             Middle Market                SEGMENT
     38%                                      31%
                                                                                      OF CLIENTS IN BR (%)
                                                                    High Net Worth
                                                                                          178.3          118%
                                                                    Individuals

                                                                    Middle Market          23.8          40%

                                    Corporate                       Corporate              1.3           62%
                                      31%



                                                         Position: Dec.05


          (*) Banking Revenues = Financial Margins + Service Fees

                                                                                                                8
Client Overlap / Opportunities


                                                             ESTIMATED
                              ESTIMATED                       LOSS IN
   SEGMENT                                                                                           OPPORTUNITIES
                               OVERLAP                        BANKING
                                                             REVENUES

   HIGH NET                                                                                   Sale of Insurance and Private
                                   30%                             5%
    WORTH                                                                                             Pension Plans
   MIDDLE
                                   37%                            11%                         Cash Management Services
   MARKET
                                                                                              Cash Management Services
  CORPORATE                        12%                             3%                             Investment Banking
                                                                                               Crossborder Transactions


     Clients whose limits should be reduced according to information on the largest clients

                                                                                                                              9
Relevant Aspects
         Leadership position among private banks in assets under management,
        custody, high net worth individual and corporate segments;
 I       Significant economies of scale in the large corporate and middle market
 T
 A
        segments;
 Ú       Acquisition of a premium credit card client base;
         Opportunity to expand into foreign markets in which ITAÚ does not currently
        have a presence.

     ITAÚ and BAC will explore mutual cooperation opportunities to benefit their clients


 B
         Will become a shareholder of ITAÚ, thus maintaining an important presence
 A      in the region, through a significant investment in a leading bank;
 C       Will appoint one member of ITAÚ’s Board of Directors.

                                                                                           10
Important Highlights
  Maintenance of BKB’s branches, which are highly regarded for their
 superior facilities, and integration with the Itaú Personnalité segment (no
 intention to shut down branches);

  The ITAÚ brand will be extended to the acquired businesses;
  ITAÚ will add a set of highly qualified professionals to its current
 structure.

                             ITAÚ will continue
                         to strengthen its tradition
                         of providing differentiated
                       service to its customers in the
                         various market segments


                                                                           11
BKB Chile (Exclusive Option)
     BankBoston Chile
                                                                                          12-31-05

                                                           Assets (R$ MM)                  5,330

                                                           Deposits (R$ MM)                3,490

                                                           Loans (R$ MM)                   3,578

                                                           Shareholders’ Equity (R$ MM)     872
                           Investment
                                                           # of Branches                     44
                              Grade
                           Baa1 from                       # of Clients (thousands)          58
                            Moody´s


     Parity CLP 514.21 / US$ 1.00 e R$ 2.2407 / US$ 1.00 as of 12-31-05
     Source: BAC

                                                                                                     12
BKB Uruguay (Exclusive Option)
      BankBoston Uruguay                                                                      12-31-05
                                                               Assets (R$ MM)                   1,844

                                                              Deposits (R$ MM)                  1,510

                                                              Loans (R$ MM)                      503

                                                              Shareholders’ Equity (R$ MM)       125

                                                               # of Branches                     15
 372,000                                 Market
 clients                                 Share                                                12-31-05
                       OCA                50%                  Assets (R$ MM)                   239

                                                               Loans (R$   MM)                  160

                                                               Shareholders’ Equity (R$ MM)      55

                                                               # of Branches                     23
       Parity UYU 24.17 / US$ 1.00 e R$ 2.2407 / US$ 1.00 as of 12-31-05
       Source: BAC
                                                                                                         13
Pro Forma Analysis

          R$ BILLION                                            PRO FORMA

                                                       BKB         BKB      Combined
 INFORMATION AS OF 12-31-05                    ITAÚ                                         %
                                                       Brazil     Foreign   ITAÚ + BKB



 Assets                                        151.2   22.6         7.4      181.2       19.8 %

 Loans (*)                                     67.8    11.6         4.2       83.6       23.4%

 Deposits                                      52.0     5.9         5.0       62.9       21.0%

 Assets Under Management                       120.3   26.0        22.4      168.7       40.3%

 Shareholders’ Equity                          15.6     2.1         1.1       18.9       21.6%



      (*) Includes sureties and endorsements
                                                                                                  14
Pro Forma Analysis (Continued)

                                                                         PRO FORMA

                                                                BKB         BKB      Combined
  INFORMATION AS OF 12-31-05                            ITAÚ                         ITAÚ + BKB       %
                                                                Brazil     Foreign

 # of Employees                                        51,036   4,800      2,200      58,036      13.7%
 # of Clients (thousands)                              16,649    203        450       17,303       3.9%
 # of Branches                                         2,391     66          82       2,539        6.2%
 Efficiency Ratio (*)                                  50.3%    77.3%      78.0%      52.7%       2.4 bps
 Basle Ratio                                           17.0%    14.7%      15.8%      16.7%       -0.3 bps



      (*) Adjusted for BKB Brazil hedge transactions
                                                                                                          15
BKB earnings requirements to avoid dilution in 2005
                                                       BKB Brazil
      Fiscal Year 2005               ITAÚ                                    ITAÚ + BKB
                                                        Required

Net Income (R$ MM)                  5,251                  325                    5,576
Shares Outstanding (mm)            1,107.7                 68.5                   1,176.2

EPS (R$/share)                       4.74                  4.74                    4.74

ROE (%p.a.)                         33.7%                 13.4%
ROA (%p.a.)                          3.5%                  1.4%
Efficiency Ratio                    50.3%                 77.3%

      In light of its scale, ITAÚ is in a position to make this acquisition EPS
                          accretive in a short period of time.
                                                                                            16
Accounting Effects

  It is management’s intention to effect the write-off of the goodwill amount
 resulting from this transaction in the fiscal year of 2006. It is estimated that
 ITAÚ’s net income will be reduced by R$ 2.2 billion, net of taxes, as a result
 of the amortization of goodwill. The amount of dividends/interest on own
 capital to be distributed to the pro forma ITAÚ shareholder base for the
 fiscal year 2006 will not be impacted by this amortization of goodwill and
 should, therefore, be higher than those paid out in 2005;

  The transaction is expected to be EPS accretive in the second half of
 2007;
  The Basle Ratio, pro forma for the acquisition, will equal approximately
 16.7%.

                                                                                    17
Impact of the Transaction on Itaúsa



 Decline in stake in ITAÚ from 48.2% to 45.4% (R$ 0.4 billion);

 Gain from the equity method due to capital increase at ITAÚ (R$ 2.0 billion);

 Negative impact of goodwill amortization at ITAÚ (R$ 1.0 billion);

 ESTIMATED POSITIVE NET EFFECT ON NET INCOME (R$ 0.6 BILLION).




                                                                                  18
Disclaimer

 This presentation contains forward-looking statements. These statements may include
 the plans and objectives of management for future operations and financial objectives,
 loan portfolio growth, and availability of funds. These forward-looking statements are
 subject to the inherent uncertainties in predicting future results and conditions. Certain
 factors that could cause actual results to differ materially include the uncertainties of
 economic, competitive, and market conditions, and future business decisions, all of
 which are difficult or impossible to predict accurately, and many of which are beyond the
 control of the Bank. Although the Bank believes that the assumptions underlying the
 forward-looking statements included herein are reasonable, any of the assumptions
 could be inaccurate and therefore there can be no assurance that the forward-looking
 statements included herein will prove to be accurate. Therefore, the inclusion of such
 information should not be regarded as a representation by the Bank or any other person
 that the objectives and plans of the Bank will be achieved.



                                                                                              19

								
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