Mr Green will be responsible for attracting foreign investment and increasing the reputation of the UK as an exporter of business services.
He is expected to relinquish his role with HSBC before the end of 2010 and take up his new, unpaid ministerial post during the start of next year.
Prime minister David Cameron said: âI am delighted to appoint Stephen to this vital role. With Stephenâs experience and expertise, I know he will make an invaluable contribution towards this crucial agenda, helping to drive strong economic growth in the UK.â
He added that the appointment indicates âthe enormous importanceâ the coalition government puts on the UKâs international trade and its business relations with other states.
Mr Green said he was delighted to be joining the government at a time when âtrade and investment are ever more critical to Britainâs economic successâ.
The new government minister originally joined HSBC in 1982 and was appointed chief executive of the group in 2003 before becoming chairman three years later.
His decision to leave HSBC follows an announcement by Barclays that Bob Diamond is become the bankâs new chief executive when current post holder John Varley steps down.
By Jim Ottewill