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Strategies & Market Trends : Telebras (TBH) & Brazil -- Ignore unavailable to you. Want to Upgrade?

To: MGV who wrote (7269)	8/28/1998 11:37:00 PM
From: djane	Respond to of 22640

Latin America turns to BankBoston's goat boston.com By Steve Bailey and Steven Syre, Globe Staff, 08/28/98 Put away the party hats. Just six months ago, BankBoston Corp. managers hosted a reception to celebrate the company's stock crossing the $100 per share plateau. The shares' value rose another 18 percent to a dizzying peak by July. BankBoston's extensive Latin America business, where the bank earns about 20 percent of its profits, was a powerful engine behind the stock advance. Today, it is dead weight in a stock market fearful of the world's emerging economies. BankBoston shares have sunk 32 percent since July 8, squeezing nearly $6 billion in market value out of the stock. The shares, down as much as 4 3/4 at one point yesterday, finished off 2 3/8 to 39 for the day (the stock prices reflect a 2-for-1 split executed in June). There is no evidence BankBoston's Latin America operation is struggling at the moment and president Henrique Meirelles insists business is as profitable as ever. ''It's clearly a matter of perception,'' said Meirelles. ''We are still seeing very strong business.'' In an analyst conference call last week, chief executive Chad Gifford said he expected 1998 profits in Argentina to increase 15 to 20 percent and even more in Brazil, the bank's other key Latin country. Several stock analysts and some investors, though cautious, agree the BankBoston selloff has been overdone. ''There is a real divergence between reality and perception,'' said analsyt Nancy Bush of Ryan, Beck & Co. ''Some of the divergence is deserved, some is not.'' BankBoston had pitched its Latin business to investors as a growth story few banks could match, a way to boost earnings faster than those of competitors that had to rely on the relatively slow-but-steady US economy. In a word, it was BankBoston's edge. Meirelles, who had run BankBoston's operation in Brazil, was promoted to chief execuitve and made the point man on an expansion plan that poured millions into the Latin operation. A team of retail banking experts from cross-town acquisition BayBanks were dispatched to South America to build up the retail franchise and its rapidly growing number of branches. The story was a hit on Wall Street. It made BankBoston special and the market valued its stock at a premium to those of other big banks. That's all history. The value of most bank stocks have declined during the same summer period, but BankBoston's steeper fall has transformed those shares from a premium investment to modestly discounted goods. BankBoston insists it is well protected from tumultuous Latin markets because most of the business is transacted in local currencies and protected from dollar-based devalutations. Trading liabilities in South America's most precarious country, Venezuala, are only about $10 million, the bank said. ''We are not a large trader,'' said Meirelles. ''What we are expanding is our indigenous operations.'' BankBoston boasts that it has survived, and usually thrived, in past periods of Latin turmoil because of its quality reputation and by taking advantage of wider interest rate spreads. But recent expansion is changing BankBoston's Latin business. Just five years ago, 56 percent of operating income out of Brazil and Argentina came from wholesale banking. Twelve percent came from retail business and the rest was derived from treasury activities. By last year, retail had expanded to 35 percent of operating income and is expected to growth further. American banks with large retail operations suffer when the US economy goes into recession and presumably it would hurt BankBoston if the economies of important Latin countries dive. Meirelles said BankBoston would be cushioned because its retail customers are people who represent the very high end of economies in Brazil and Argentina. But rich people get hurt in a bad economy too. This much is certain: BankBoston's stock will be tied more closely than ever to the market's perception of Latin markets. For better or worse. Steve Bailey and Steven Syre can be reached by e-mail at boscap@globe. com or at 929-2902 or 929-2918, respectively. This story ran on page F01 of the Boston Globe on 08/28/98. c Copyright 1998 Globe Newspaper Company.

To: MGV who wrote (7269)	8/30/1998 10:27:00 AM
From: posjim	Respond to of 22640

thanks for all the great posts on TBR folks...I am still trading TBR and holding other long postions in this stock..tanked my 86 1/2 postion at even money and bought back at 77 1/2...holding..also I bought some Bank of Boston on Friday after some strong suggestions from friend at PRU in Massachusetts. Barrons does not look good this week, as to latin American holdings, so I expect we could go lower. Hoping that after Labor Day we can take off on the up side again..:) Thanks again for all the posts. Jim