MercoPress. South Atlantic News Agency

South Africa's Standard Bank Argentine deal an attention call for competitors

The planned purchase by Standard Bank – South Africa's largest private bank by assets — of most of US' Bank of America Corp.'s BankBoston Argentina assets, marks the first large investment by a foreign player in the sector since Argentina's 2001-2002 economic meltdown, and an attention call for competitors, banking sources told MercoPress.

Standard Bank said in a statement on December 22 that it had secured Argentina's central bank approval for the transfer of Bank Boston Argentina assets that, it added, should be completed in the first quarter of 2007. It will buy about 76.7 percent of Bank Boston Argentina while the balance will be held by Argentine families Werthein and Sielecki who will have an option to increase their stake to 30 percent. Standard Bank said that the cost of establishing the new business would be about 90 million dollars and that after the deal its capital base in Argentina would be about 225 million dollars. However, a Bank Boston source talking to MercoPresson condition of anonymity said that the total investment would be reportedly worth some 300 million dollars. "The truth is that it is not very clear. There has been little information." An Argentine Central Bank source said that they had no details about the deal. Bank Boston Argentina has 82 branches and 2,500 employees and ranks as the the country's fifth or eight largest private bank, according to different reckonings, the Bank Boston source said, adding that so far all employees will be absorbed by Standard Bank. Standard Bank had only a minor corporate business in Argentina which it acquired from Dutch corporate bank ING when ING left Argentina amid the country's worst-ever economic crisis in 2001-2002. The crisis caused two governments to fall amid deadly riots and banking restrictions imposed to prevent a debacle of the financial system. Thousands of savers demanding to have their savings back in dollars and not in devalued pesos as ordered by the government gathered every day in front of banks banging pots and pans and banks' facilities with hammers and iron bars. Most banks installed iron fences for protection. Fearing violence from savers, Argentina's traditionally highly-formal bank managers started dressing casually not to appear bank officers and used back doors to go out on the sly. Some banks left the country outright. Now, the economy has grown about nine percent each of the last for years and the Supreme Court of Justice this week ordered banks to reimburse savers in local currency the total value originally held in dollars in a ruling that many say is fairly reasonable and put and end to uncertainty. The Bank Boston source said that the purchase of Bank Boston by Standard Bank "signals that a strong player sees good business amid the country's recovery and means an attention call for other players. Standard is a very aggressive retail bank in South Africa." Despite there had been some local banking mergers, this is first large banking acquisition by a foreign investor since the crisis, the source said, adding hat Standard Bank did not buy assets involved in legal disputes linked to the crisis. Standard Bank has a 144-year presence in South Africa. It has more than 40,000 employees in 38 countries, among them, the US and Britain. Separately, the deal will mean the death certificate for BankBoston in the world, as Argentina is the last country where it still exists as a brand after some years ago BankBoston was acquired by Bank of America worldwide, the source said. In the US the BankBoston brand disappeared because Bank of America was a stronger brand, but in Argentina, Brazil, Chile and Uruguay it was maintained. "Bank of America has a policy of not changing brands but let them die away," the source said. Bank of America's BankBoston assets in Brazil, Chile and Uruguay were bought this year by Banco Itaú, Brazil's second largest private bank, which did not maintain the BankBoston brand. The worldwide purchase of BankBoston by Bank of America also meant Bank of America's return to Argentina, a country that it had left. "Bank of America was actually insisting in that it was intent in boosting its new Argentine operations but our sensation was that they were making every arrangement to sell them," the BankBoston source said. "Over the last three years there were constant rumours, until in early 2005 it was announced that BankBoston Argentina would be sold to Standard Bank and their partners." (MercoPress â€" Guillermo Háskel)