Yeah, I agree that the 10% across the board offer wasn't a good plan at all from the banks perspective.
The second other banks offer any sort of discounts, the media will be all over it and people will be well informed of whether it makes sense for them to accept or not - it's not the 1960's any more and people are a lot more informed
Therefore, the bank really need to try to identify the people that are most likely to sit out the term of the mortgage if no discount is offered. I'm not sure how they'd go about this - perhaps the people who have the longest term and are in negative equity to the extent that the discount would just about bring them out of negative equity.
Say, for example, someone took a mortgage of €100,000 on a house valued at €200,000 at the height of the boom. In my area, that house would now be worth around €80,000. Their mortgage balance would now be in the region of €88,000 if they took it out over 30 years (and it was taken 5 years ago).
Obviously, if a person in this scenario were to get an agreement from the bank to sell, they'd owe a shortfall of €8,000. If they were offered a 10% discount, they could sell up with no shortfall and enter rented accommodation or emigrate if they wished.
I wonder how hard it would be for the bank to identify people that fall into the above category? I'd imagine it'd be very easy considering they should still have the original valuations as well as mortgage outstanding information stored in their databases.