Oct. 14 (Bloomberg) -- Bank of New York Mellon Corp., the world's largest custodian of assets, will keep the books for the U.S. Treasury purchases of toxic securities, part of the government's $700 billion financial-rescue plan.

The bank, based in New York, will provide ``custodial, accounting, auction-management and other infrastructure services,'' the Treasury said today in a statement. Financial terms of the contract weren't disclosed.

BNY Mellon, which has $23 trillion in custody assets, beat out rivals including JPMorgan Chase & Co., State Street Corp. and Northern Trust Corp. BNY Mellon was one of 70 firms that applied for the role and one of 10 to meet the minimum eligibility requirements. Bidders were required to oversee at least $500 billion in investor assets.

The company will begin work immediately on overseeing the Troubled Asset Relief Program on a three-year contract, the Treasury said. The government plans to buy illiquid assets from banks and securities firms, making it easier for them to raise capital and resume lending.

The Treasury didn't disclose how much it would pay BNY Mellon for its services. On its Web site, the Treasury blacked out the section of the contract describing the monthly fee BNY Mellon is to be paid.

BNY Mellon was also one of nine financial institutions that today got an equity infusion from the Treasury as part of a plan to bolster confidence in the financial system. The federal government will invest $3 billion in BNY Mellon in preferred stock and warrants.

Securities-Service Division

BNY Mellon rose $4.08, or 13 percent, to $34.76 at 4:02 p.m. in New York Stock Exchange composite trading. The stock has declined 29 percent this year.

BNY Mellon said the Treasury's work will be done by its securities-servicing unit. The unit is the biggest source of revenue at BNY Mellon, accounting for about half of the company's $3 billion in fees during the second quarter.

Alexander Hamilton, who was Treasury secretary under George Washington, started Bank of New York in 1784. Last year, the bank merged with Mellon Financial Corp. to vault past JPMorgan as the largest asset custodian.

The Treasury has not yet announced the investment firm that will manage troubled mortgage-backed securities, another part of the rescue program. Pacific Investment Management Co. and BlackRock Inc. submitted proposals to manage the assets, people familiar with the matter said last week.

Companies are required to oversee at least $100 billion in U.S. dollar-denominated fixed-income assets for clients to compete for the contracts to buy and sell mortgage-backed securities.

The Treasury hired Chicago-based Ennis Knupp & Associates on a one-year, $2.5 million contract to provide advisory services and help evaluate potential assets managers. The company was hired Oct. 11 and began work immediately, the Treasury said.

To contact the reporters on this story: John Brinsley in Washington at jbrinsley@bloomberg.net; Sree Vidya Bhaktavatsalam in Boston at sbhaktavatsa@bloomberg.net.

Last Updated: October 14, 2008 16:18 EDT