This approach partly reflects a pragmatic approach from a relatively small administration but is primarily based on a realistic assessment of the decision-taking capacity of the Union’s institutions. Absolute priority has been given to all files relating to the promotion of a Banking Union as set out in the December 2012 European Council conclusions.
Thus, in effect, a significant proportion of negative equity loans was assumed to default in each quarter, and little of the unsecured portion of the loan would be recovered.14 Since the house price forecasts entailed a large fraction of the mortgage book remaining in negative equity throughout the horizon of the exercise, this produced a higher estimate of life-time losses than had been envisaged in the top-down exercise of the previous year.