Including the impact of such sales in estimates of the loss given default (LGD) parameter automatically raises capital requirements considerably on all performing loans and consequently reduces capital ratios. Analyses based on a sample of Italian banks show that this reduction could be significant.
In addition, unemployment is low, households are not burdened by excessive debt and real wages are rising on account of low inflation. As reported by the Federal Statistical Office, the German economy grew by 1.5% in real terms in 2014.