A manager from the structured credit risk desk at a bank is presenting to a group of newly hired risk analysts on calculating cash flows in a securitization structure. The manager illustrates the procedure with the existing collateral pool of loans and the corresponding liabilities, all with a maturity of 5 years, using the following information:

| Initial number of loans in the collateral pool | 100 |

|-----------------------------------------------|-----|

| Principal amount of each loan | EUR 1,000,000 |

| Total coupon interest to be paid annually on all junior and senior bonds | EUR 6,300,000 |

| Maximum annual amount flowing from the excess spread into the overcollateralization account | EUR 1,500,000 |

| Swap rate per year for all maturities | 3.5% |

| Recovery rate in the event of a loan default | 45% |

The manager makes additional observations as follows:

• The loans in the collateral pool pay a fixed spread of 2.2% over the swap curve.

• There were no defaults in year 1.

• The value of the overcollateralization account at the end of year 1 was EUR 0.

What is the value of the overcollateralization account at the end of year 2 if there are 8 defaults in year 2?