$9.3b

Bloomberg Businessweek (Europe) - - MARKETS/ FINANCE - −Laura J. Keller and Dakin Camp­bell

Cor­bat said Citi was fo­cus­ing more on “tar­get clients.”

At Deutsche Bank, co-CEO John Cryan said late last year that the bank will cull its client list by half in cer­tain busi­ness lines. Bank ex­ec­u­tives have also spo­ken of tar­get clients in the divi­sion that han­dles trad­ing, where some 500 cus­tomers gen­er­ate 80 per­cent of rev­enue.

Gold­man Sachs Group’s equity re­search team has also di­rected its re­sources to­ward heavy-vol­ume hedge fund shops, ac­cord­ing to some­one fa­mil­iar with the bank’s poli­cies. Rep­re­sen­ta­tives of Gold­man Sachs and Deutsche Bank de­clined to com­ment.

Even smaller re­gional banks have lists, with Stifel Fi­nan­cial dub­bing a ros­ter of 21 tar­get clients its “Black­jack” list, ac­cord­ing to a per­son fa­mil­iar with the mat­ter. CEO Ron­ald Kruszewski says he’d be “sur­prised at any firm that is try­ing to sell a prod­uct that didn’t have a list.”

This chase for a few prized clients has been spurred by dwin­dling rev­enue in some bank busi­ness lines. Post-cri­sis reg­u­la­tions have made it harder for banks to make money by forc­ing them to hold more cap­i­tal against risky as­sets. In this en­vi­ron­ment, “ev­ery­one is talk­ing” about how to boost prof­itabil­ity, says Greg Braca, head of U.S. cor­po­rate and spe­cialty bank­ing at TD Bank.

To make the cut for Cit­i­group’s fa­vored list, firms typ­i­cally must gen­er­ate $2 mil­lion an­nu­ally in trad­ing rev­enue with the bank. Each of the Fo­cus Five firms trade mul­ti­ple times that amount. Rep­re­sen­ta­tives of all five de­clined to com­ment.

“It’s a dog-eat-dog world,” says Kevin Kelly, the chief in­vest­ment of­fi­cer for Re­con Cap­i­tal Part­ners in New York. “Its tough, but that’s just how it works.” Some say the odds of suc­cess on Wall Street are tilted more and more to­ward those with the deep­est pock­ets. Says Jeff Sica of Cir­cle Squared Al­ter­na­tive In­vest­ments in Mor­ris­town, N. J.: If you’re not a big client, it’s be­come “a ma­jor dis­ad­van­tage.” Sher­win-Wil­liams takes a plunge with Valspar. Bring­ing the two paint brands to­gether is a big-box play. The deal, which may be sub­ject to an­titrust scru­tiny, will help Sher­win-Wil­liams get more cov­er­age in chain stores such as Lowe’s, as well as shops abroad. Cur­rently the paint­maker sells its brand only at its own stores, which tend to draw con­trac­tors, rather than the do-it-your­self crowd.

The bot­tom line Cit­i­group and oth­ers on Wall Street have fo­cused their busi­nesses on the care and feed­ing of a smaller num­ber of top clients.

Edited by Pat Regnier Bloomberg.com

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