After more than 20 years of trying to break into Puerto Rico's banking market. Bank of America has finally opened a San Juan branch.

The commonwealth government approved establishment of the bank, the first such permission in 45 years, on the condition that the bank would carry out the first "wholesale banking" operation ever established in the United States.

Bank of America's reputation in financing agricultural projects was the deciding factor which finally swayed the government to grant its petition, despite opposition by the Puerto Rico Banks Association.

The Carlos Romero Barcelo administration has developed a long-term plan to rejuvenate the island's agricultural sector in an effort to reduce its $1 billion annual food import bill. The plan involves $2 billion in agricultural financing over the 20 years, government officials have estimated. Bank of America reportedly expressed willingness to provide that financing.

Local banks have been reluctant to give agricultural loans because of years of experience with the island's declining production and farm failures, an official explained. According to Commonwealth Treasury Department statistics for December, loan portfolios included only $26 million in agricultural loans out of more than $4 billion total.

Bank of America believes that the volume of business in Puerto Rico warrants branch operations, vice president Luis Morales explained. The island has also become more attractive with the influx of roughly $2 billion in corporate funds since the congressional passage of a law in 1976 allowing 936 corporations to repatriate Puerto Rican profits without taxation.

As soon as approval of the B of A application was announced, the Banks Association voiced opposition, claiming that added competition would were weakened by the 1974 recession and suffered heavy losses on defaulted construction loans.

Bank of America would face the same economic realities in the agricultural sector as other banks and would, therefore, be forced to offer the same loan terms to make a profit, an association official argued.

To assuage the banks' fears, Commonwealth Treasury Secretary Julio Cesar Perez asked the association to help draft a wholesale banking regulation, which would limit B of A's direct competition with them.

Under the new regulation, a novel concept in U.S. banking, according to officials. Bank of America is restricted to one branch and may only accept demand and time deposits of more than $300,000 and grant loans over $300,000. Agricultural deposits and loans, on the other hand, will not be limited.

The San Juan branch opened quietly March 6. In the first two months, it accumulated more than $40 million in assets, mostly from 936 deposits.

Agricultural loans are still only a small percentage of its loan total, Morales said, because the government plan is just getting under way.

The bank has granted $12 million to the government for coffee purchases and is now discussing a loan to finance large scale rice production. One small loan has been given to a private farmer and 10 others are being discussed, Morales said.

Meanwhile, the increased competition has apparently spurred other banks to look more favorably on agricultural loans. Chase Manhattan, which provided no agricultural financing as of December, has designated an agricultural loan officer and has granted more than $500,000 in loans to farmers as of last week. Banco Popular, the largest local bank, has also increased its portfolio.

Banks are fearful of Bank of America's competition because of the past record of offshore-based banks on he island.

Chase and Citibank, established in 1933 and 1918, have come to dominate the local market because of their larger capital bases and relations with corporations. Together they attracted more than 60 percent of the incoming 936 funds.

Two Spanish banks, Banco de Santander and Banco Central de Madrid, have also gained entry into Puerto Rico in the last two years through the purchase of failing local banks.