In a SPIEGEL interview, London banker and lay preacher Stephen Green, group chairman of HSBC, discusses the divide between his Christian faith and the pursuit of profit, the morality of being involved in the subprime mortgage business and whether he and his fellow bankers have learned anything from the financial crisis.

SPIEGEL: Mr. Green, when was the last time you were ashamed to be a banker?

Green: I haven’t felt ashamed when it comes to my own work. However, over the past few years there has been a portion of the global business that was simply unacceptable. Some financial products were much too complicated and not transparent enough. Moreover, they were sold to people who often had no idea what they were buying. This sort of business was very successful for a few years, but it resulted in catastrophe. In this respect, it was disgraceful for all of us.

SPIEGEL: You are not just the group chairman of Britain’s HSBC, the world’s largest private bank. In your free time, you also serve as a lay preacher in the Anglican Church. Have you ever prayed: “Please God, rescue capitalism”?

Green: Well, I was certainly never at a point at which I felt that it was so diabolical that it ought to be abolished. All economic systems have their faults and capitalism is the best of a bad bunch — that is even though, only a year ago…

SPIEGEL: … shortly after the Lehman bankruptcy…

Green: …it was truly on the brink.

SPIEGEL: When did you last give a sermon?

Green: Last Sunday. My sermon was about the gospel and the financial crisis.

SPIEGEL: Do you sometimes hear personal reproaches from the members of your flock?

Green: Rarely, because people are thoughtful, and they know that the problems were — and still are — complex. Of course, many people feel that they lost their jobs because of the irresponsibility of some financial managers. I can understand this anger.

SPIEGEL: Are these two things even compatible: being religious and being a banker?

Green: It’s a conflict that we must all confront. However, it isn’t just possible, but necessary, to resolve the contradictions.

SPIEGEL: Do you truly believe that Christian faith and the uncompromising pursuit of profit can be reconciled?

Green: The pursuit of profit must be guided by morals, because not everything the market considers legal is also legitimate. If we accept capitalism, we must also accept this challenge. That’s where religion, among other things, plays a role.

SPIEGEL: Your fellow banker Lloyd Blankfein, CEO of the US investment bank Goldman Sachs, recently said that he was doing God’s work. How did you feel about that?

Green: I prefer not to comment on Blankfein.

SPIEGEL: How often do you experience naked greed in your industry?

Green: Very often. But the overwhelming majority of people want to be convinced that their work makes sense and has a purpose. Profits alone are pointless. This also applies to bank employees. In this sense, all cultures and religions are very similar. However, working for the common good, coming up with an effective social welfare system — all of this also needs functioning banks too.

SPIEGEL: Nevertheless, the crisis has led to surprisingly few changes so far. There are hardly any new laws and bankers are once again giving themselves breathtaking bonuses. And the financial products that triggered the crisis in the first place are already being traded again.

Green: There is more happening than you think. Everyone is learning in, and from, this crisis. However, this process has just begun.

SPIEGEL: Are you asking for patience?

Green: The reform of the capitalist system, which is necessary, is far too important for us to be acting precipitously. Caution is important. We could make mistakes if we act too quickly.

SPIEGEL: But acting too slowly is an even greater risk. First in with a suggestion for change, first served. And that could lead to nothing changing at all.

Green: I consider that risk to be low. I’m more optimistic than you are in this regard. And too much protection and regulation could stifle trade, which in turn would first affect the poorest countries. That is precisely what we should be trying to avoid.

SPIEGEL: If there is too little regulation, there is the risk of the next bubble bursting.

Green: Of course, which is precisely why I believe that we should examine very carefully the issue of where and how we can begin with any changes.

SPIEGEL: Is Prime Minister Gordon Brown doing the right thing by drastically taxing the bonuses of British bankers?

Green: That’s a political question…

SPIEGEL: …to which you, as chairman of the British Bankers’ Association, ought to have an answer, particularly as the association has already criticized the new law.

Green: All I can say is this: The system has to think and act for the long term, so as to prevent instability. The taxation of bonuses is merely a short-term measure.

SPIEGEL: This sort of thing can sometimes be helpful, if only to allay public outrage over the conduct of bankers.

Green: Certainly. But it doesn’t guarantee the system’s long-term survival.

SPIEGEL: It sounds as if you considered Brown’s venture to be populist.

Green: That’s what you say.

SPIEGEL: We also say that we expect to see huge excesses in terms of bonuses in the coming weeks and months…

Bankers Big Bonuses ‘Not Particularly Important’

Green: …which are sometimes worth criticizing. But they are not particularly important when it comes to the system’s fundamental flaws.SPIEGEL: Why? They fueled the orientation toward short-term profit that many of your fellow bankers had up until recently.

Green: Of course. But just look at the amounts in question and compare them with the overall cost of damages inflicted during the crisis. This is marginal. And besides, we can’t turn back the clocks to pre-globalization days.

SPIEGEL: Is the crisis already over?

Green: In the financial sector the worst is behind us. But the real economy will feel the effects for a long time to come.

SPIEGEL: In other words, people and governments are now paying the price for the damage the bankers have done.

Green: And they will be paying off these mountains of debt for a few years to come. Unemployment will continue to rise in many countries.

SPIEGEL: Many countries are deeply in debt. Even Dubai can hardly pay its bills anymore. How bad is this situation for the HSBC and other banks?

Green: We have been in Dubai since 1946. In fact, we were the first bank to do business there. The country will retain its status as a regional financial center. Dubai is not Lehman (Brothers, the financial services firm that filed for the largest bankruptcy in US history in September 2008, sparking a financial crisis). The country has far too many assets in the form of natural resources. It has accumulated a lot of debt but it is manageable.

SPIEGEL: Are you at all concerned about bankrupt states in Greece or Ireland?

Green: I do not wish to, and I cannot, rule out such shocks in the future. But I don’t expect them. However the issue of exit strategies is another matter.

SPIEGEL: By that, you mean how do the central banks of various countries plan to stop pumping money into the global economy? After all, higher interest rates will just making servicing debts more costly.

Green: It’s a complex issue and every country has to develop its own approach. Australia has already begun to raise interest rates, even though the country was not hard-hit by the financial crisis.

SPIEGEL: In your new book “Good Value: Reflections on Money, Morality and an Uncertain World”, you write that you expect a “new world order” to begin taking shape. What will it look like? And what should it look like?

Green: I see the G-20 group as an indication that this new order is already underway. In the past developing countries were not represented in such groups. But now they are growing in self-confidence and stepping onto the world stage.

SPIEGEL: It can’t be a coincidence that your CEO is moving his office in the New Year from London to Hong Kong.

Green: That’s where our bank was first established. In other words, we are returning to our roots. Asia’s global economic dominance will continue to grow, while the dominance of the West slowly declines. I’m convinced of that.

SPIEGEL: Throughout the entire crisis, HSBC never required a government bailout. But your company is also accused of perhaps being too big to fail in a crisis.

Green: There are many banks, even supposedly small banks like Northern Rock that cannot simply be allowed to fail. They have to be liquidated in an orderly manner.

SPIEGEL: But they could also be broken up first.

Green: HSBC has a relatively simple structure. Under the umbrella of the holding company, there are independent institutions in all of the countries in which we are active, companies that could survive on their own. Of course, we do come to the assistance of subsidiaries if they get into trouble.

SPIEGEL: Your US subsidiary was one of the largest providers of so-called subprime mortgages. That was certainly an expensive rescue operation.

Green: Certainly, it cost us billions. But we did step up to the plate, we did not just leave our colleagues to their fate. From today’s standpoint those efforts are regretful. But in 2003, it made sense.

SPIEGEL: You approved mortgage loans to people who couldn’t afford them. For a moralist like you, this must have been a huge contradiction.

Green: Not in the least. There are two ways you can tell how decent a company is. First: Does it honestly assume the responsibility — and the costs — when something goes wrong? We lived up to our responsibility in that regard.

SPIEGEL: That’s not what we were asking.

Green: Second: How dishonorable was the business? And I can tell you right now, that the subprime loans were completely legitimate.

SPIEGEL: You had to have known that many of your borrowers would not be able to make their mortgage payments.

Green: Eighty percent of these customers are paying their mortgages without a hitch. And it’s a rather arrogant way of looking at things, when the affluent tell those who are not as well off that they have no right to buy real estate.

SPIEGEL: This isn’t about rights, but about risks — and, consequently, your profits.

‘We Made it Possible for Poorer People to Own Homes’

Green: We made it possible for poorer people to own homes…SPIEGEL: But you must have known that an unemployed person cannot pay off a mortgage. One might consider that immoral.

Green: I can’t accept that, because we handled subprimes carefully. Without us, these people would have fallen into the hands of loan sharks.

SPIEGEL: With all due respect, your bank didn’t get into the subprime business because it wanted to help out poor Americans. It got into the subprime business because it expected to make a handsome profit.

Green: Making a profit and promoting a social concept are not mutually exclusive. In fact, it was perfect. In 2002, we could not have predicted the problems that would occur later.

SPIEGEL: The moral problem lies elsewhere. The risks associated with these mortgages were securitized, and therefore hidden, a thousand times over. The responsibility was simply sold onto someone else.

Green: You’re completely right. But HSBC hardly pursued this strategy. We securitized almost nothing — precisely because we consider this to be a questionable practice.

SPIEGEL: It’s also immoral when a bank forecloses on the houses of their insolvent customers. The Christian thing to do would be to at least allow these people to keep a roof over their heads. As long as there are no buyers for the houses it doesn’t cost the banks anything.

Green: It wouldn’t only be the moral thing to do, it would also be in the interest of the investors. And in fact we did offer that option to many of these homeowners.

SPIEGEL: What kind of business does an ethical banker engage in?

Green: He deals in products that are useful and socially beneficial, and that are fairly traded. Long-term relationships with his customers and his shareholders are important to him.

SPIEGEL: Given this self-image, could you support a weapons company, for example?

Green: There are activities that I, and my bank, consider to be questionable. For this reason, we have almost no involvement in the weapons industry. We want the things we finance to be sustainable.

SPIEGEL: Do you have lists that classify companies as “good” or “bad?”

Green: No. We tend to look at business sectors instead.

SPIEGEL: Is HSBC more ethical than others?

Green: Neither more ethical nor better. There are undoubtedly some smaller banks that don’t pay too much attention to how they make their money. But nowadays, the big banks pay very close attention to these issues, even if the public is under the impression that bankers are motivated purely by greed.

SPIEGEL: A former employee of HSBC in Switzerland is believed to have turned over data on more than 100,000 customers to French authorities. What do you know about this?

Green: All that is clear so far is that there was criminal activity involved, in which a former employee gained access to customer information illegally and passed it on. However, based on what we know at this point, this affects fewer than 10 of our customers.

SPIEGEL: Tax evasion and possibly even Mafia accounts are believed to be involved. Now, purely as a question of morals: Would you understand if an employee betrayed the company for purely moral reasons?

Green: If he had any suspicions, I would expect him to report them internally first. In our bank, all laws and regulations are strictly observed in all countries and units. We have departments that look into everything, such as money laundering and compliance issues, as well as an internal audit department. Tax evasion, money laundering, drug or Mafia money are not things our bank knowingly tolerates. For this reason, no one has to steal customer data.

SPIEGEL: So, could you understand it: Yes or no?

Green: It depends. End of story.

SPIEGEL: Mr. Green, we thank you for this interview.

Interview conducted by Thomas Tuma and Beat Balzli. Translated from the German by Christopher Sultan.