The Divestment of Non-Core Assets

How Big Banks Are Reshaping Themselves

By: Brandon Chi

Jan. 22, 2026

As the new year begins, the banking industry is going through a quiet but consequential transformation regarding their balance sheets. Rather than chasing scale or expanding into every business line, these large financial institutions are making a different choice; they are divesting non-core assets to sharpen focus, free up their capital, and improving returns. Looking into the market, it isn’t a reaction to crisis, but rather a strategic reset for uncertainty.

After years of post-pandemic volatility, and regulatory tightening, banks are reassessing what belongs on their balance sheets and what doesn’t. The result is a growing wave of divestments that may define the next phase of institutional banking.

At a fundamental level, the wave of divestments reflect a renewed focus on business quality and capital efficiency. Across the market, firms are increasingly looking into which segments truly earn their cost of capital, and which simply consume management attention. This had led to a sharp rise in spin-offs, asset sales, and exits from non-core businesses.

Consumer Banking

The Apple Card, issued by Goldman Sachs since 2019.

A clear example is Goldman Sachs’ decision to pull back from consumer banking and sell down parts of its credit card and retail finance operations. What was once positioned as a growth initiative by Goldman ultimately proved volatile, capital-intensive, and misaligned with the firm’s core strength in M&A advisory, sales and trading, and asset management. The load on their balance sheet was not worth the continuation of subsidizing underperforming segments, and firms choosing to redeploy capital into higher-return, core franchises.

This shift reflects broader pressures, especially in today’s monetary policy. The tighter financial conditions, and a market that is once again rewarding discipline and return on invested capital. Holding capital-intensive or complex businesses that do not directly support core franchises are harder to justify to shareholders, and divestment is now looked at as optimization

Citigroup: A Blueprint for Strategic Divestment

No institution illustrates this divestment shift more clearly than Citigroup. Under CEO Jane Fraser, Citi has spent several years unwinding non-core international consumer operations and exposures. That effort continued into 2026, when the bank absorbed the final financial impact of exiting Russia; a move that weighed on near-term earnings but marked the completion of a long-running exit.

The market reaction was mixed, but the message was clear from Citi. That the firm is willing to absorb short-term pain to emrge with a more focused, capital-efficient business. A $1.1-$1.2 billion loss for Citi in late 2025. The goal is not to be smaller for its own sake, but to concentrate on its core businesses: institutional banking, wealth management, and services where Citi maintains a competitor in the financial services sector.

This divestment-led restructuring is increasingly being viewed as best practice, a deliberate strategy that other banks are choosing to follow, rather than a last resort that banks only did under stress.

Why 2026 Matters

Several factors make 2026 a pivotal year for divestment. First, regulatory clarity is improving. After years of uncertainty, banks now have a clearer sense of how capital rules will be applied, allowing management teams to act decisively rather than delay these strategic changes. A big note is Jerome Powell being done being the Federal Reserve chair in May. It is highly likely that President Trump will instate a new federal reserve chair who is more keen on his monetary policy. Likely, to reduce the federal interest rate that Jerome Powell has a more conservative view on. As well, deal conditions have been improving. Investment banking pipelines are being rebuilt, and buyers are increasingly willing to step in as banks divest assets that no longer fit.

The divestment of non-core assets does not mean those assets disappear. Instead, the ownership is shifting.

- Private equity and private credit funds are acquiring loan portfolios, specialty finance platforms, and carve-out businesses.

- Mid-sized banks are selectively acquiring divested units to gain scale in specific niches.

The redistribution of assets is reshaping the financial ecosystem. Banks are increasingly acting as distributors, while private capital becomes the long-term owner of many financial risks.

The divestment is becoming one of the defining bank themes of this year. It reflects an industry that is no longer chasing these growth stories at all costs, but instead prioritizing focus on sustainable returns. These banks are not shrinking because they have to, but divesting because they’ve decided what they want to be.