FORMER HBOS chief executive James Crosby has been formally stripped of his knighthood at his own request, following a scathing parliamentary report into the bank’s collapse.
Mr Crosby asked to have the honour removed in April, when he also relinquished almost a third of his bank pension. The Parliamentary Commission on Banking Standards claimed he was the “architect of the strategy that set the course for disaster” in his handling of the bank.
The official announcement that the knighthood had been withdrawn from Mr Crosby was announced in the London Gazette, the official journal of record. It reported: “Letters Patent dated 11 June, 2013, have passed the Great Seal of the Realm cancelling and annulling the Knighthood conferred upon James Robert Crosby on the 6 December, 2006, as a Knight Bachelor.”
Following the commission’s report in April, Mr Crosby announced he would give up 30 per cent of his £580,000 a year bank pension, and stood down from roles with catering firm Compass Group and private equity firm Bridgepoint.
He was given a knighthood after leaving HBOS in 2006, but following the report said he believed “it is right that I should now ask the appropriate authorities to take the necessary steps for its removal”.
Responding to the report in April he said it made for “very chastening reading”. He added: “Although I stood down as chief executive of HBOS in 2006, some three years before it was taken over by Lloyds, I have never sought to disassociate myself from what has happened … I am deeply sorry for what happened at HBOS.”
For a knighthood to be withdrawn, the honours forfeiture committee has to make a recommendation to the Prime Minister, who then passes it on to the Queen for a decision.
Mr Crosby’s voluntary loss of knighthood follows the fate of disgraced former Royal Bank of Scotland chief executive Fred Goodwin. Mr Goodwin had his title taken from him by a Whitehall honours committee, and bowed to public pressure to hand back £200,000 a year of his £700,000 RBS pension.
Mr Crosby – also a former deputy chairman of the Financial Services Authority – was left with a bank pension of £406,000 a year, after arranging for it to be reduced.
Mr Crosby quit HBOS in 2006 – more than two years before Lloyds took over at the height of the financial crisis, but following Bank of Scotland’s merger with Halifax to form HBOS.
HBOS was already struggling financially – leaving new parent company Lloyds Banking Group with £1.6 billion more debt than it had been expecting on agreeing to take over the bank. The debt was accrued chiefly due to its over-exposure to bad loans in the housing market.
The bank then became one of three institutions to be bailed out by the UK government.
The report by the Banking Standards Commission, a government body set up to improve the UK’s banking system, estimated that 96 per cent of shareholder value was wiped out when HBOS collapsed, costing taxpayers £20.5bn.
Lloyds Banking Group has since cut tens of thousands of jobs and remains 39 per cent state-owned.
The banking crisis also precipitated the economic slump from which the UK is still struggling to recover.