At a time when most investors are fleeing Europe like it's a house on fire, one highly rated fund manager is placing a huge bet on European banks.

David Herro of Oakmark International, who Morningstar named international stock fund manager of the decade in 2010, had huge investments in banks such as France's BNP Paribas, the Bank of Ireland, Spain's Banco Santander, and Italy's Intesa Sanpaolo, relates an article in Fortune.

Herro is a value investor who subscribes to the bottom-up style of stock picking. Looking for under-valued companies, he analyzes individual prospects of companies rather than trying to predict macro-economic trends, which he says is like trying to predict the weather.

Remarkably, he doesn't call himself a risk-taker.

More conventional investors may call him crazy, but Fortune points out that Herro has returned 9.2 percent a year since 1992, compared to the 4.9 percent return of the MSCI EAFE index that tracks developed markets outside North America.

His fund is down 10 percent over the last three month, Fortune says. Investors need to be able to stomach poor returns over short- and medium-term periods.
Herro is surprisingly calm about his big bet, according to the article.

"If you look at the economic history of the world, problems come and problems go. There are problems, and they do have to be dealt with," he told Fortune. "And our view is that all these problems are manageable."

Herro doesn't think the eurozone will disintegrate. If Greece leaves, Germany and other EU countries will do what it takes to help Spain and Italy.

European banks and the eurozone are in a critical phase, says Standard & Poor's, according to MarketWatch. Their future depends on the upcoming European Union meetings, the Group of 20 summit, and Greek elections this Sunday,

"The outcome could lead us to review our four key expectations for Europe's banks — regarding the economic outlook, funding and liquidity conditions, capitalization, and government support," S&P states in a press release.

Out of Europe's 50 largest banks, 27 have negative outlooks or are on S&P's negative CreditWatch.