bank service pricing in which account activity is separated into component categories and account service charges imposed for each activity. Thus, checking account customers are charged a fee for each check paid and each cash withdrawal from an automated teller machine, as opposed to a monthly account maintenance fee. In unbundling service pricing, a bank may also calculate an Earnings Credit rate on balances in deposit accounts, which can then be used to reduce the charges for unbundled services. The purpose in unbundling is to price bank services so each earns a profit, or has a measurable loss, and also to impose service charges fairly on all bank customers. Unbundled pricing also is a potential source of fee income, or noninterest income, which can be used to meet noninterest expenses, such as employee salaries. Contrast with account bundling.
- separating a hybrid security or derivative into the components that were originally bundled to create it;
- separating returns on an asset into classes or, in the case of the unbundled stock unit (developed in the late 1980s but never successfully marketed), decomposing a common stock into three parts: a dividend claim, a zero coupon bond, and a stock appreciation right;
- the process by which one Wall Street firm in the 1980s created what it called an unbundled unit, an antitakeover device packaged and sponsored by the investment bank comprising a 30-year bond, a preferred share, and a warrant; the unit was then exchangeable for a voting share of a client corporation's common stock;
- in Great Britain, divesting a conglomerate of its noncore businesses.
