There’s a secret list that Citigroup Inc. keeps on its equity-research desk at its swank new campus in Tribeca.
And if you’re not on it -- well, you might as well be nobody.
At the top is a handful of hedge-fund giants, the “Focus Five,” that bring in big money for Citigroup: Millennium, Citadel, Surveyor Capital, Point72 and Carlson Capital, according to a person with direct knowledge of the list. It represents a growing trend on Wall Street where the most-lucrative clients get the best service: the top trade ideas, hours-long calls with analysts, intimate soirees with executives, bespoke trading models, on and on.
Across the global financial industry, a new class system is emerging. Banks are jettisoning the we-do-everything model to cater to prized clients that generate the most revenue while turning others away. At Citigroup, Morgan Stanley, HSBC Holdings Plc and more, entire businesses are being focused on the wealth and influence of a new financial elite -- what amounts to the 1 percent of the 1 percent.
And with the rise of this 0.01 percent, one thing is clear: Even on Wall Street, the divide between the privileged few and everyone else is growing -- and fast.
‘Rude Awakening’
“It’s a rude awakening when you find out that research isn’t readily available” from Wall Street banks, said Jeff Sica, who oversees about $1.5 billion as the president of Circle Squared Alternative Investments in Morristown, New Jersey.
Scott Helfman, a Citigroup spokesman, said the bank doesn’t comment on its relationships with clients, while Morgan Stanley’s Tom Walton declined to comment. HSBC said in a statement that it’s “reducing the number of dormant and low-revenue clients” to help the firm build a more sustainable business.
Whether it’s in equities or fixed-income, the shift in priorities is undeniable.
Morgan Stanley now ranks its most-profitable European fixed-income customers in three groups -- “supercore,” “core” and “base,” said people familiar with the matter, who asked not to be identified because they aren’t authorized to speak publicly. Everyone else -- about 2,000 firms in total -- has limits on their access to the company’s management, sales and research departments.