New Jersey Division of Investment, Trenton, hired Callan to assist with finding a new custodian for the $67 billion system. The move was due to a change in state law that allows the system to contract with an out-of-state bank if it has a branch in New Jersey, said Steven E. Kornrumpf, director. Previously, custodial banks had to be based in New Jersey. Mr. Kornrumpf said he hopes to find lower fees and expanded services by shopping around. The legal change also may open the door for the fund to explore securities lending, Mr. Kornrumpf said, something it has not done previously.
First Union Corp., which acquired New Jersey-based First Fidelity Bank, handles most of the fund’s domestic custody. Bankers Trust New Jersey, now part of Deutsche Bank, handles much of the global custody. Mr. Kornrumpf said bank mergers over the years left few candidates among New Jersey-based banks.
