European markets are set for a solid recovery and investors waiting for the continent's banks to sell off cheap assets are likely to be disappointed, said J. Christopher Flowers, CEO of private equity firm J.C. Flowers.
While many investors are looking to take advantage of highly distressed selling by European banks, it's simply not happening, Flowers said at the AVCJ Asian Private Equity and Venture Forum in Hong Kong this week.
"I don't think there's going to be much deep discount distressed selling," he said.
(Read more: Why the euro area remains a good investment bet)
"Financial institutions are trying to deleverage," he noted. "If you sell something at a big loss, you don't decrease your leverage. You increase your leverage. It just basically doesn't work," he said.
"If banks have troubled assets in Europe and they're trying to deleverage, it makes more sense to just roll forward rather than take a big loss."