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
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Acquired Businesses
Bank of America
Corporation
Option
BKB
Chile
Option
BKB
Brazil
Corporate
Middle
&
Small
BKB
Uruguay
Option
OCA Uruguay
Credit Cards
Premier
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
% PAID
IN SHARES
SHARES
ISSUED / TOTAL
CAPITAL
DATE
ACQUIRER
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%
Itaú
BKB Brazil
4,508
100.0%
5.8%
May-06
TARGET
TOTAL
AMOUNT
R$ MM
Source: Merrill Lynch
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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.
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BKB Brazil
Ranked 13th
by the Central
Bank of Brazil
Present in Brazil since 1947
12-31-05
Market
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
# of Clients (thousands)
203
# of Branches
66
Source: BKB Publication, BAC, Central Bank of Brazil and Market Share taken from ANBID – Mar/05
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BKB Brazil - Segmentation
Banking Revenues (BR) (*)
High Net Worth
Individuals
38%
Number of Clients
Middle Market
31%
Corporate
31%
SEGMENT
THOUSANDS INCREASE
OF CLIENTS IN BR (%)
High Net Worth
Individuals
178.3
118%
Middle Market
23.8
40%
Corporate
1.3
62%
Position: Dec.05
(*) Banking Revenues = Financial Margins + Service Fees
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Client Overlap / Opportunities
SEGMENT
ESTIMATED
OVERLAP
ESTIMATED
LOSS IN
BANKING
REVENUES
HIGH NET
WORTH
30%
5%
Sale of Insurance and Private
Pension Plans
MIDDLE
MARKET
37%
11%
Cash Management Services
3%
Cash Management Services
Investment Banking
Crossborder Transactions
CORPORATE
12%
OPPORTUNITIES
Clients whose limits should be reduced according to information on the largest clients
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Relevant Aspects
I
T
A
Ú
 Leadership position among private banks in assets under management,
custody, high net worth individual and corporate segments;
 Significant economies of scale in the large corporate and middle market
segments;
 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
A
C
 Will become a shareholder of ITAÚ, thus maintaining an important presence
in the region, through a significant investment in a leading bank;
 Will appoint one member of ITAÚ’s Board of Directors.
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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
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BKB Chile (Exclusive Option)
BankBoston Chile
12-31-05
Investment
Grade
Baa1 from
Moody´s
Assets (R$ MM)
5,330
Deposits (R$ MM)
3,490
Loans (R$ MM)
3,578
Shareholders’ Equity (R$ MM)
872
# of Branches
44
# of Clients (thousands)
58
Parity CLP 514.21 / US$ 1.00 e R$ 2.2407 / US$ 1.00 as of 12-31-05
Source: BAC
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BKB Uruguay (Exclusive Option)
BankBoston Uruguay
372,000
clients
OCA
Market
Share
50%
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
12-31-05
Assets (R$ MM)
239
Loans (R$
160
MM)
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
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Pro Forma Analysis
PRO FORMA
R$ BILLION
INFORMATION AS OF 12-31-05
ITAÚ
BKB
Brazil
BKB
Foreign
Combined
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%
ITAÚ + BKB
%
(*) Includes sureties and endorsements
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Pro Forma Analysis (Continued)
PRO FORMA
ITAÚ
BKB
Brazil
BKB
Foreign
Combined
# 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
INFORMATION AS OF 12-31-05
ITAÚ + BKB
%
(*) Adjusted for BKB Brazil hedge transactions
15
BKB earnings requirements to avoid dilution in 2005
Fiscal Year 2005
Net Income (R$ MM)
ITAÚ
BKB Brazil
Required
ITAÚ + BKB
5,251
325
5,576
1,107.7
68.5
1,176.2
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%
Shares Outstanding (mm)
EPS (R$/share)
In light of its scale, ITAÚ is in a position to make this acquisition EPS
accretive in a short period of time.
16
Accounting Effects
 It is management’s intention to effect the write-off of the goodwill amount
resulting from this transaction in the fiscal year of 2006. It is estimated that
ITAÚ’s net income will be reduced by R$ 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%.
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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).
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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.
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