1 acquisition of bankboston’s operations in latin america may 2, 2006

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1 ACQUISITION OF BANKBOSTON’S OPERATIONS IN LATIN AMERICA May 2, 2006

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Page 1: 1 ACQUISITION OF BANKBOSTON’S OPERATIONS IN LATIN AMERICA May 2, 2006

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ACQUISITION OF BANKBOSTON’S OPERATIONS IN LATIN AMERICA

May 2, 2006

Page 2: 1 ACQUISITION OF BANKBOSTON’S OPERATIONS IN LATIN AMERICA May 2, 2006

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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

Page 3: 1 ACQUISITION OF BANKBOSTON’S OPERATIONS IN LATIN AMERICA May 2, 2006

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Acquired Businesses

Bank of AmericaCorporation

BKB Chile

BKBBrazil

BKB Uruguay

CorporateMiddle

&Small

Premier

Option Option

OCA UruguayCredit Cards

Option

Page 4: 1 ACQUISITION OF BANKBOSTON’S OPERATIONS IN LATIN AMERICA May 2, 2006

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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.

Page 5: 1 ACQUISITION OF BANKBOSTON’S OPERATIONS IN LATIN AMERICA May 2, 2006

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Recent Acquisitions in Shares in Brazil

DATE ACQUIRER TARGET

TOTAL

AMOUNT

R$ MM

% PAID

IN SHARES

SHARES ISSUED / TOTAL

CAPITAL

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%

Source: Merrill Lynch

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

Page 6: 1 ACQUISITION OF BANKBOSTON’S OPERATIONS IN LATIN AMERICA May 2, 2006

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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.

Page 7: 1 ACQUISITION OF BANKBOSTON’S OPERATIONS IN LATIN AMERICA May 2, 2006

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BKB Brazil

Present in Brazil since 1947

Assets (R$ MM) 22,603

Deposits (R$ MM) 5,911

Shareholders’ Equity (R$ MM) 2,124

# of Employees 4,800

Ranked 13th

by the CentralBank of Brazil

# of Clients (thousands) 203

Assets under Management (R$ MM) 26,014

Loans (includes sureties and endorsements) (R$ MM) 11,639

Source: BKB Publication, BAC, Central Bank of Brazil and Market Share taken from ANBID – Mar/05

# of Branches 66

1.4%

0.6%

3.3%

1.4%

MarketShare12-31-05

Page 8: 1 ACQUISITION OF BANKBOSTON’S OPERATIONS IN LATIN AMERICA May 2, 2006

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BKB Brazil - Segmentation

Banking Revenues (BR) (*) Number of Clients

(*) Banking Revenues = Financial Margins + Service Fees

Position: Dec.05

Corporate31%

High Net Worth Individuals

38%Middle Market

31%SEGMENT

THOUSANDSOF

CLIENTS

INCREASE IN BR (%)

High Net Worth Individuals

178.3 118%

Middle Market 23.8 40%

Corporate 1.3 62%

Page 9: 1 ACQUISITION OF BANKBOSTON’S OPERATIONS IN LATIN AMERICA May 2, 2006

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Client Overlap / Opportunities

SEGMENTESTIMATED OVERLAP

ESTIMATED LOSS IN

BANKING REVENUES

OPPORTUNITIES

HIGH NET WORTH

30% 5% Sale of Insurance and Private Pension Plans

MIDDLE MARKET

37% 11% Cash Management Services

CORPORATE 12% 3%Cash Management Services

Investment BankingCrossborder Transactions

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

Page 10: 1 ACQUISITION OF BANKBOSTON’S OPERATIONS IN LATIN AMERICA May 2, 2006

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Relevant Aspects

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.

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.

BAC

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

ITAÚ

Page 11: 1 ACQUISITION OF BANKBOSTON’S OPERATIONS IN LATIN AMERICA May 2, 2006

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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

Page 12: 1 ACQUISITION OF BANKBOSTON’S OPERATIONS IN LATIN AMERICA May 2, 2006

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BKB Chile (Exclusive Option)

Assets (R$ MM) 5,330

Deposits (R$ MM) 3,490

Shareholders’ Equity (R$ MM) 872

BankBoston Chile

Loans (R$ MM) 3,578

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

Investment Grade

Baa1 from Moody´s

# of Branches 44

# of Clients (thousands) 58

12-31-05

Page 13: 1 ACQUISITION OF BANKBOSTON’S OPERATIONS IN LATIN AMERICA May 2, 2006

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BKB Uruguay (Exclusive Option)

Assets (R$ MM) 1,844

Deposits (R$ MM) 1,510

Shareholders’ Equity (R$ MM) 125

BankBoston Uruguay

Loans (R$ MM) 503

Source: BACParity UYU 24.17 / US$ 1.00 e R$ 2.2407 / US$ 1.00 as of 12-31-05

Assets (R$ MM) 239

Shareholders’ Equity (R$ MM) 55

Loans (R$ MM) 160

OCA

MarketShare 50%

# of Branches 15

12-31-05

372,000clients 12-31-05

# of Branches 23

Page 14: 1 ACQUISITION OF BANKBOSTON’S OPERATIONS IN LATIN AMERICA May 2, 2006

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Pro Forma Analysis

Assets

Loans (*)

Deposits

151.2 22.6

67.8 11.6

52.0 5.9

19.8 %

23.4%

21.0%

Assets Under Management 120.3 26.0 40.3%

R$ BILLION

(*) Includes sureties and endorsements

Shareholders’ Equity 15.6 2.1 21.6%

7.4

4.2

5.0

22.4

1.1

181.2

83.6

62.9

168.7

18.9

%BKBBrazil

PRO FORMA

BKBForeign

CombinedITAÚ + BKB

ITAÚINFORMATION AS OF 12-31-05

Page 15: 1 ACQUISITION OF BANKBOSTON’S OPERATIONS IN LATIN AMERICA May 2, 2006

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%

Pro Forma Analysis (Continued)

(*) Adjusted for BKB Brazil hedge transactions

# of Employees

# of Clients (thousands)

# of Branches

BKBBrazil

PRO FORMA

51,036 4,800

16,649 203

2,391 66

13.7%

3.9%

6.2%

Efficiency Ratio (*) 50.3% 77.3% 2.4 bps

Basle Ratio 17.0% 14.7% -0.3 bps

2,200

450

82

78.0%

15.8%

58,036

17,303

2,539

52.7%

16.7%

BKBForeign

CombinedITAÚ + BKBITAÚINFORMATION AS OF 12-31-05

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BKB earnings requirements to avoid dilution in 2005

ITAÚ + BKBITAÚ

Net Income (R$ MM)

ROE (%p.a.)

ROA (%p.a.)

Efficiency Ratio

5,5765,251

BKB Brazil

325

Fiscal Year 2005

EPS (R$/share) 4.744.74

Shares Outstanding (mm) 1,176.21,107.7

4.74

68.5

13.4%

1.4%

77.3%

33.7%

3.5%

50.3%

Required

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

Page 17: 1 ACQUISITION OF BANKBOSTON’S OPERATIONS IN LATIN AMERICA May 2, 2006

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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.