European financial institutions are missing opportunities to sell distressed loans because certain institutions are precluded from bidding, says Boston-based DebtX.

The structure of most loan sales keep many small- to mid-tier institutional investors from bidding, DebtX concluded after a survey of capital markets participants.

DebtX operates a marketplace for loans. Its survey was called the European Distressed Loan Buyer Survey: Creating Liquidity for European Bank Debt.

The poll of more than 50 firms with €150 billion of funds under management found that many investors would be active buyers of distressed European bank debt if loan sales were structured in smaller pools or allowed for the purchase of individual loans or small groups of loans.

 "If Europe’s largest institutions can reduce the size of transactions, there will be more liquidity for European bank debt," said DebtX CEO Kingsley Greenland. "European banks could accelerate their strategic goal of reducing NPLs and rebuilding their balance sheets."

Investors also told DebtX that institutions selling distressed debt appear willing to sell only to the largest investors, the firm said.