The Pennsylvania state treasurer, Barbara Hafer, has chosen Mellon Bank Corp. to provide securities custody and securities lending services.
Ms. Hafer announced Monday that Mellon would replace State Street Corp. as custodian of the state's $70 billion securities portfolio.
This year Commonwealth Court upheld Ms. Hafer's right to void the State Street contract, which had been entered into by her predecessor.
Ms. Hafer said the Mellon proposal is "$3 million a year better for the commonwealth and our pension funds," based on conservative estimates.
State Street became custodian of the state's securities during the administration of Catherine Baker Knoll. When campaigning for treasurer, Ms. Hafer promised to give Pennsylvania banks an opportunity to compete for the business.
Seven major financial institutions, including State Street, competed for the new contract.