The global banker in a universe of one
Last June, the Wall Street Journal described HSBC Group chairman Stephen Green as "in a universe of one".
As the only head of a major international financial institution to be an ordained minister of the Church of England, it is hardly surprising that he is a staunch advocate of the role Christian values play in the post-recessionary economic world. By his own admission, he has an optimistic view of globalisation and the good it has served, not least lifting millions out of poverty.
On his first visit to Malta, which he promised was not his last, Stephen Green introduced his 2009 book "Good Value: Reflections on Money, Morality and an Uncertain World", then launched a jointly funded afforestation project by HSBC and a bank-sponsored publication on the islands' historic chapels. His wife Jay Green donated much needed equipment for children with disabilities to the Sannat primary school, on behalf of the HSBC Foundation. Mr Green made a substantial donation to HSBC Malta's new charity foundation.
The Canary Wharf-based chairman of Europe's largest bank does not cut corners. To all intents and purposes, he could have collated his thoughts in an opinion piece and sent it to the Financial Times. Instead he wrote a book, his first "real ambitious book project" after the admittedly slimmer "Serving God? Serving Mammon?", which examined whether a person of faith could work in the financial markets with integrity.
"I wanted to gather my thoughts about a range of issues - not just about banking, not just about the crisis, but about the way in which a world has become increasingly connected," Mr Green told The Times Business last Saturday.
"Globalisation, urbanisation, are changing the way people think about themselves, the way people do business, the way people react to each other. This is a very huge change in the human spirit. I became increasingly interested in trying to collect my thoughts and put them down on paper. The result was not just an article, but a book."
The chairman pointed out globalisation is spoken of as if it were a recent development, all to do with technology.
"It's not," he insisted. "It is a huge movement of the human spirit. It has been going on from the very earliest times. Globalisation's spread went with more and more trade and the emergence of ports, cities and markets, increasing the tendency across the world for people to interact with each other. Of course, over the last couple of hundred years, that process has accelerated dramatically, and it goes on accelerating. In the last couple of decades we have seen the digital revolution which brought people even closer together.
"2008 was the year when it emerged that over half the world's population lived in cities. All of this is changing us: it changes the way people think of themselves, it changes social structures, it changes the way people interact. It is a very fundamental part of human development."
Apart from the aspects of globalisation that cause some concern, Mr Green emphasised this world order enriches people enormously, particularly culturally. It changes us all, he insisted, whether we like it or not, and there is no alternative to it.
Should we be despondent or optimistic about it? he asked. In "Good Value" he is optimistic and hopeful, but not naïve - there are challenges, stresses and strains that must be faced.
The book's message could be described as semi-religious, he conceded.
"It is certainly spiritual and I write as somebody who has an explicit religious commitment," Mr Green said. "But many people, whatever their religious perspective, will recognise that human beings have a spiritual dimension to them. They are not just materialistic beings - they yearn for something more. 'Good Value' raises the question about who we are and what is the purpose of life."
Last October, Mr Green famously said the banking industry owed the world an apology. He remarked then that a culture change was needed to repair public perception of bankers, but earlier this month defended HSBC's intention to work with shareholders over pay rises for top executives, and the bank paid several millions in pay and bonuses to investment banking staff. What did he believe to be a fair perception of bankers?
"The crisis has been a searing experience around the world," he said. "Many people have lost their jobs, and in parts of the world there has been widespread breakdown in public confidence in commerce in general, in banks in particular. There are many lessons to be learned. The causes of the crisis are quite complex. They have to do with global imbalances in the real economy, the rise of Asia, too much consumption in the West.
"There were some basic imbalances in the world economy compounded by specific decisions in terms of monetary policy in the US, for example, and behaviour in some parts of the banking industry that created a lot of the speculative froth. I do not think that one of the lessons is that there is an alternative to finding a way forward. You cannot go back to a simpler world that is not connected. The market is the main engine of social and economic development.
"We must never forget that market-oriented economics have lifted hundreds of millions of people out of poverty. The rise of economies such as China and India is an extraordinary success story, for all of the challenges. We have to recognise that the markets need to be properly supervised, that they cannot police themselves, they will not correct themselves. The markets make a wonderful servant of human aspirations. They make a terrible master."
Not all banks owed the world an apology, Mr Green insisted, echoing HSBC Bank Malta chief executive officer Alan Richards' exact words last year.
Ironically, he explained, of the millions of people employed in banking all over the world, it is a relatively small proportion of those who were engaged in the activities for which that part of the market owed the world an apology.
Why did he make such a strong statement?
"Because it is true," he answered. "But I would not want to be misunderstood as saying that therefore everything that banks have always done or have been doing in the crisis means we owe the world an apology. That is not fair. There are many millions of people employed by the banking industry who have been doing good, honest, solid jobs, providing services to consumers and businesses. The sad thing is that there were parts of the industry that were engaged in frothy activities that were unsustainable in nature and often illusory in their profitability."
There is much work to be done around the international table now - the breakdown in trust will take time to repair, he said. 2009 was a two-pronged year of transition. It was the year in which coordinated international government action prevented a collapse of the financial system and pulled it back from the brink and, by the end of it, conditions were much more stable. And by December, most economies turned the corner out of the recession.
"This year policy makers, regulators and bankers will be involved in very intense debate about what the lessons are, and the right ways of ensuring that as we go forward the system is more stable, stronger, more transparent, more liquid, so that it can serve the needs of the real economy and real society more robustly. It is in everybody's collective interest to get it right."
Mr Green said much progress had been made and the banking eco-system was stronger than it was in 2008 in terms of liquidity, capitalisation (which regulators were working on improving further) and controlling and decreasing leverage. This new framework, he believed, would see banks providing stable, consistent service on the basis of which public confidence would return.
He cautioned that besides ensuring banks were responsibly led and were conscious of their economic and social responsibilities, it was crucial that they were profitable. Reform had to recognise the overall need for a stable financial system populated by businesses that were able to sustainably earn a reasonable return on the risk capital that underpinned them.
In late January, some of the world's most prominent bankers came out in favour of a proposal for a global tax on banks for a fund to cover the cost of future big bank failures as a way to avoid taxpayers footing the bill again.
Mr Green acknowledged the US-born idea was gaining international consideration but warned that any tax on banks should only seek to reach the desired objectives.
"What is in nobody's interest is to put banks in a situation where they cannot earn a reasonable return on their capital," Mr Green emphasised. "The mechanisms for stability and reasonable returns are necessary if banks are to discharge their proper function of providing services to depositors and credit to the real economy.
"The general consensus will be that it is better to talk about a tax on balance sheet than on transactions. Much of the reform that we are talking about can only make sense if it is international, and that is part of the complexity of the dialogue."
Turning to group business, Mr Green said the bank was working its way through the situation of its loss-making US operation. HSBC closed the branch-based consumer fin-ance business known as Household a year ago and has run down the book.
"What we said about 2009 was that it was going better than expectations both in terms of the run down and in terms of impairments experience. We will continue to work at that," he added.
Across the world, the group's overall strategy is a focus on emerging markets and on international connectivity as HSBC's calling card.
The bank will continue to invest in its strong business in Asia, where HSBC was born in 1865, and invest in consolidating its network across the region which has shown impressive levels of growth. Just weeks ago, chief executive Michael Geoghegan relocated to Hong Kong to oversee the steering of the Asian business - already present in countries like China, India, Vietnam, Korea and Indonesia - more closely.
Meanwhile, should Chinese regulators give the group the green light, HSBC could raise billions through a planned Shanghai listing later in the year.
"The Chinese authorities know we will be interested when they allow international companies to list in Shanghai," Mr Green explained.
"We will be interested because we want to show our commitment to that all-important market and we continue to grow our business in China in so many ways. It is our homeland, of course.
"As far as China is concerned, we are not a domestic bank in the mainland, but the Chinese do not think of us as just another foreign bank. We have a strong franchise, a strong brand, we have tens of thousands of people working for us who are Asians. We are not a foreign bank in so many ways in Asia."
Despite having no specific announcements to make, Mr Green said the group was committed to continued investment in Malta, where it is proud its operations are an important part of the market.
"We are very conscious that our business is important to Malta's economic well-being and to its social development," he added. "It is a very important business for us."
Asked whether the group had any plans to redomicile additional ancillary arms to the islands as it did with the call centre servicing the UK, Mr Green answered that a Malta base was attractive in many ways and opportunities were always examined.
"We have no current specific plans," he pointed out. "The challenge for Malta is to remain cost-competitive. We would look at Malta as a country strategically positioned in Europe that is part of the EU, but it is also true to say that there are other countries that can offer international competitiveness in terms of cost and infrastructure. But we are here. We are the largest bank in Malta. We never enter a country other than for the long haul. And we have a CEO in Malta who is always looking to make the case for more investment to the islands."
Would HSBC be interested in using Malta as a stepping stone to penetrate the Libyan banking sector, now that licences for subsidiaries are being offered?
HSBC, the chairman re-marked, had a very solid presence in the region - it was the largest international bank in Egypt - and along the North African coast, where HSBC has several representative offices in Libya and Algeria, for instance.
"Clearly Libya is a country with strong natural resources and I would expect over time that our presence will develop," Mr Green said.
"We are conscious of the long-standing links between Malta and Libya. I don't know how we would develop our presence in Libya, but however it develops, clearly there are going to be links with Malta because HSBC customers have links with the islands."
Born in England in 1948, Stephen Green has degrees from Oxford University and the Massachusetts Institute of Technology.
The group chairman of HSBC Holdings plc began his career with the British government's Ministry of Overseas Development. In 1977 he joined management consultants McKinsey & Co. Inc., with whom he undertook assignments in Europe, North America and the Middle East.
He joined the Hong Kong and Shanghai Banking Corporation Ltd in 1982 with responsibility for corporate planning activities. By 1985 he was put in charge of the development of the bank's global treasury operations. He became group treasurer of HSBC Holdings plc in 1992, with responsibility for the group's treasury and capital markets businesses globally.
In March 1998 he was appointed to the board of HSBC Holdings plc as executive director, investment banking and markets responsible for the group's investment banking, private banking and asset management activities. He assumed additional responsibility for the group's corporate banking business in May 2002.
Stephen Green was named group chief executive on June 1, 2003, and group chairman three years later.
He is chairman of HSBC Bank plc and of HSBC Private Banking Holdings (Suisse) SA. He is a director of the Hong Kong and Shanghai Banking Corporation Ltd, of HSBC North America Holdings Inc., and of HSBC France.
Based at the HSBC Building at 8 Canada Square on London's Canary Wharf, Mr Green has given up his own bonus for two consecutive years.
An ordained minister of the Church of England, he became chairman of the British Bankers' Association in November 2006 and chairman of the Prime Minister's Business Council for Britain in January 2009.
He is also a trustee of The British Museum, and an honorary trustee of Peking University.
Stephen Green is married with two daughters.