Massachusetts Likely to Retain BNY Mellon as State Pension Custodian

The Massachusetts state pension fund board’s administration and audit committee has recommended that the board select BNY Mellon’s bid of $2.7 billion to remain as the fund’s custodian, pending the completion of successful negotiations.

With BNY Mellon’s current $2.7 billion custody contract expiring in 2014, Massachusetts decided last year to accept new bids for the next contract. Despite the state suing BNY Mellon for allegedly overcharging the pension fund on FX fees, the audit committee has recommended that the state stick with BNY Mellon’s $2.7 billion offer because the bank offered the most compelling range of services.

Other bidders included State Street and Northern Trust, which both tendered $2.5 billion bids. The board gave more consideration to State Street, as their bid was inflation adjustable.

The full board will meet on October 18, at which time they hope the negotiations will be complete, and they can vote on BNY Mellon’s bid.