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“When the competition is falling by the wayside, we suggest buying the survivors,” says Jack Adamo.

The editor of the industry-leading Insiders Plus newsletter adds, “Those banks that do not need government capital will be in the best position to grow profitably.” One such bank, he believes, is HSBC Holdings, Plc. (NYSE: HBC).

“Although we’re not near the end of the woes in the financial sector, enough dust has settled that it is clear which banks will be the survivors when conditions normalize

“There are a very few European banks in this circumstance, including HSBC, which is one of the largest banks in the world, and almost certainly the strongest one based in Europe.

“It provides a wide range of financial services from over 9,500 offices in 85 countries. It is one of only two major banks in Europe that is refusing funding from Central Banks.

“So far, it has only needed to raise less than $2 billion, and it did it internally without issuing new shares. That’s important for several reasons.

“First and foremost, it means that current shareholders’ earnings are unlikely to be diluted by large preferred shareholders. Such dilution is the rule rather than the exception both here and abroad with most money center banks.

“Bigger firms have had to raise capital in the high tens of billions of dollars, and some may break the 100 billion mark before this is through.

“Second, it shows that the company has conducted its business in a prudent manner, guarding shareholders interests and avoiding risky behavior that produces short-term bonuses for executives, but hurts shareholders in the long run.

“Last, but definitely not least, it means HBC will not be subject to limitations and interference with how it runs its business.

“American banks who receive government funding will be required to keep lending at 2007 levels, whether there are good loans to be made or not. European banks will probably face the same hurdles.

“This is an echo-disaster waiting to happen, and we’ll again be able to thank our politicians and regulators for it.

“But companies that don’t accept government capital will be able to adhere to the business practices that have kept them strong. Eventually, the strong will get stronger and the weak will get weaker. I’d rather go with the former.

“In addition, the bank pays a nice dividend of over 6% while we await an economic recovery. We’ve seen how our good, dividend-paying stocks have outperformed the market by a margin of three to one this year.

“I should also note that HBC is one of the best established banks in China and the rest of developing Asia. There will be a lot of growth in those areas in years to come.”