Surface Ripples

The Men At The Top: Stephen Green

Stephen Keith Green was born in November 1948. Wikipedia and The Telegraph can’t seem to agree whether on 3rd or 7th, but his official CV on the HSBC website declares that it was the latter.

He grew up in Brighton, attending church with his father, a partner in a local solicitors' firm, and mother. After school at nearby Lancing (where apparently he was “good at music” but “bad at sport”) he went to Exeter College Oxford where he started reading modern languages but switched to PPE (Philosophy, Politics and Economics). He still speaks French and German.

He is a practising and “performing” Christian, having become a deacon in Hong Kong in 1988 after studying by correspondence. An ordained Anglican priest, he preaches regularly and has written a book – Serving God? Serving Mammon? Christians and The Financial Market. It was apparently at Oxford that his religion strengthened, though he credits no single incident or person.

After university he took a gap year, working at an alcoholics' hostel in Spitalfields in London's East End. It was there he met his wife Joy, a nurse who was also a volunteer. They married in 1971 and have two daughters.

Green didn’t go straight into banking. He started his career with the Ministry of Overseas Development, which also gave him the opportunity to do two years' study in America. He took a masters in political science and business at Massachusetts Institute of Technology to add to his Oxford credentials.

In 1977 he joined McKinsey & Co and carried out projects in Europe, North America and the Middle East. This and his US exposure must have helped when he joined what was then The Hongkong and Shanghai Banking Corporation Limited in 1982 with responsibility for corporate planning activities. In 1985, he was put in charge of the development of the bank’s global treasury operations. In 1992 he became Group Treasurer of HSBC Holdings plc, with responsibility for the HSBC Group’s treasury and capital markets businesses globally.

After this in 1998 he was appointed to the Board of HSBC Holdings plc as Executive Director, Investment Banking and Markets responsible for the investment banking, private banking and asset management activities of the Group, and took on the added responsibility for the Group’s corporate banking business in May 2002. He became Group Chief Executive on 1 June 2003 and Group Chairman on 26 May 2006.

Green is clearly a different sort to what you might expect from a banker. Indeed, The Telegraph described him as “the unlikely banker” in a profile in 2007 and said of him “He is so faceless that when he was promoted The Guardian had to carry one of its famous apologies for using a photo of the wrong person.” In the same profile, they said “He is cerebral and academic - so thoroughly civilised you would expect to encounter him in an Oxbridge common room rather than the top of an international bank.” What is the underlying message about bankers here?

He had a reputation for watching costs. One thing for which he is remembered was cutting bonuses in 2001 when he was head of investment banking which saw more than 40 staff walk out after receiving no bonus (something which would have endeared him to Vince Cable).

Green was no stranger to controversy during his early days CEO. HSBC’s acquisition of America’s Household International was dogged by controversy concerning payouts to executives and a $484million settlement due to accusations of predatory lending by U.S. regulators. In the UK he became the object of opprobrium after deciding to shift around 4,000 call-centre and back-office from the UK Asia. At the time, this was the largest job migration of any British financial-services company.

Thankfully, he has shoulders broad enough to absorb criticism from inside and from without. He may have been seen as an “unlikely banker”, but he will clearly stand firm on what’s important to him. Following on from Sir John Bond would not have been easy. The latter was seen as more of an international statesman – how was the cerebral Green to succeed him? Succeed he did, however, and cum laude.

Green has a code of dealing fairly with customers, employees and community. He feels that one needs as an employee (whatever your religion, creed or colour) to espouse the importance of morality and integrity in business life. "I happen to believe it is the only basis of sustainable success over the long term," he said (Guardian , October 18, 2003). Would that some of his peers in the financial services world had taken the same view, instead of pursuing short-term gain.

In terms of his successes, he saw the significance of emerging markets in Asia, Mexico, and elsewhere to HSBC's continued success (especially in terms of their potential consumer business). Despite this, he didn’t ignore Europe, overseeing the launching of a credit-card business in Poland – a growing economy that had joined the European Union.

He also sought new opportunities outside Europe. One was supporting HSBC's development of a Islamic financial services business in Asia, with a comprehensive range of products and services at Amanah Finance - HSBC's Islamic division. Apart from Asia, he felt and stated that this service needed to be aggressively marketed throughout HSBC's global banking network. In the end, he pushed the group to develop products that gave HSBC a significant stake in the Islamic finance industry. The results were that in 2003 HSBC was the first international bank in the UAE to provide Islamic personal-finance products when it launched Amanah Personal Finance. In the same month, it was the first "high street" (finance district) bank in the United Kingdom to launch Islamic personal finance services under its Amanah brand. He also launched a British-based Islamic finance program and expanded the program to over 70 branches in the United Kingdom.

His expansion in Asia focused heavily on China. Unlike others who looked for short-term gain, Green felt that HSBC had to take a long-term perspective in China and told Brian Kelleher in a Reuters news-service report "China is going to become more and more important on a global scale. I think you will see us constantly growing our business there" (August 11, 2004).

Green also oversaw a successful £12.5billion rights issue in 2009 to shore up the bank’s capital base following a hectic year and the write-downs that it and previous years had bought – particularly from the US. He also successfully defused a highly-publicised challenge from Eric Knight of Knight Vinke - a vocal opponent of the US venture.

In terms of bankers’ compensation, Green is unequivocal. He has been quoted as saying:

"Compensation practices ran out of control and perverse incentives led to dangerous outcomes. There is genuine and widespread anger that the contributors to the crisis were in some cases amongst the biggest beneficiaries of the system," The Independent

“The industry has done many things wrong. It is important to remember that many ordinary bankers have always sought to provide good service to their customers, but we must also recognise that there have been too many who have profoundly damaged the industry’s reputation.” The Sunday Times

Too many people had “abandoned asking whether something was the right thing to do and focused only on whether it was legal and complied with the rules.” The Sunday Times

The money will not be as important to him, judging from his character, although no doubt his HSBC pension and shareholdings should keep the wolves at bay.

Green will leave HSBC by the end of 2010 to become an unsalaried “Trade Minister” for David Cameron (although it is believed that he will receive a peerage). However, it may be that the Prime Minister has engaged Green for his banking experience. Vince Cable, the Business Secretary, who was initially in favour of splitting investment and retail bank activity, has apparently already had discussions with him as to how banks can change their structure without this forcing them to relocate overseas. No easy task, given that if he gets it wrong, we may yet see HSBC, Standard Chartered, Barclays and a large portion chunk of the UK financial services business defect to parts abroad where regulation is lighter, taxes lower and politicians altogether more accommodating.

In conclusion, Green has had his share of the “slings and arrows of outrageous fortune” but deserves credit for steering the behemoth that is HSBC through some remarkably challenging times and not taking government support. He deserves all success in his next role.

Labels: Career, Financial, Strategy

posted by William Martin @ 22:41