FORMER HBOS chief executive Sir James Crosby will relinquish almost a third of his pension pot and asked to be stripped of his knighthood, following a damning report highlighting his role in the collapse of the bank.
• James Crosby also steps down as director of catering firm Compass Group
In a contrite statement, Sir James described last week’s report by the Parliamentary Commission on Banking as “chastening reading” and said he was “deeply sorry” for his actions at the helm of the Edinburgh-based institution, which was bailed out with £20.5 billion of taxpayers’ money.
“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,” he said.
“I would like to express my sincere regret for events and my appreciation for the personal support I have been shown.”
The move, which will see Sir James give up 30 per cent of his £580,000-a-year pension, has parallels with the fate of disgraced former Royal Bank of Scotland chief executive Fred Goodwin.
Although Mr Goodwin did not volunteer to give up his knighthood, which was taken away from him by a Whitehall honours committee, he caved in to public pressure to hand back £200,000 a year of his £700,000 pension.
Sir James – also a former deputy chairman of the Financial Services Authority – will now be left with a pension of £406,000 a year.
In Friday’s report, the commission described Sir James as the “architect of the strategy that set the course for disaster” for the bank and claimed that he held primary responsibility for its collapse – along with his successor as chief executive, Andy Hornby, and former chairman Lord Stevenson. Politicians who had called for action against Sir James following the commission’s report welcomed yesterday’s announcement, but called for other executives involved in the downfall of the banks to consider their own positions.
SNP MSP John Wilson said: “I think he has taken a step in the right direction – there is an admission that he personally feels he was complicit in actions that have now, ultimately resulted in him handing back a portion of his pension and his knighthood.
“I just hope his colleagues take this on board and take the same decision as he has.”
Scottish Conservative MSP Alex Johnstone added: “He appears to have accepted a significantly greater level of responsibility for his actions than many others within his industry. I would therefore go as far as to commend him for setting an example to his peers.”
Mr Hornby is currently chief executive of Gala Coral and Lord Stevenson is a non-executive director at the high street bookseller Waterstone’s.
The MPs and peers who made up the commission also insisted that Sir JAmes had sowed the “seeds of destruction” of the bank – which is still 40 per cent owned by the taxpayer – and called on the new City regulator the Financial Conduct Authority to consider barring him, Lord Stevenson and Mr Hornby from working again in finance.
Former banker Sir James, who also stepped down from his role with private equity firm Bridgepoint on Friday, quit HBOS in 2006 – two years before the takeover by Lloyds but following Bank of Scotland’s merger with Halifax to form HBOS.
But HBOS was already struggling financially – leaving the new parent company with £1.6bn more debt than its new buyers had expected, chiefly due to its over-exposure to bad loans in the housing market. The bank, which was by then part of Lloyds Banking Group, was one of three institutions to be bailed out by the UK government just a few weeks after the merger.
Sir James was rewarded with a knighthood for services to the financial industry after leaving the bank in 2006, but said yesterday that he would request its removal.
He said: “I would therefore like to repeat today what I said when I appeared in public before the commission in December; namely that I am deeply sorry for what happened at HBOS and the ensuing consequences for former colleagues, shareholders, taxpayers and society in general.
“Shortly after I left HBOS, I received the enormous honour of a knighthood in recognition of my own – and many other people’s – contribution to the creation of a company which was then widely regarded as a great success. In view of what has happened subsequently to HBOS, I believe it is right that I should now ask the appropriate authorities to take the necessary steps for its removal.”
Anyone who has been granted an honour cannot relinquish it without an official annulment by the Queen, known as debasement.
A spokesman for the Cabinet Office said no formal application for his knighthood to be forfeited had yet been made.
“If someone would like their honour to be formally forfeited, it is the decision of the Forfeiture Committee,” the spokesman said.
Sir James is also set to discuss with the trustees of his pension scheme – which he built up over his 30 year career, including 12 years at Halifax and HBOS - how the 30 per cent reduction would be implemented and whether the amount waived should go to support good causes, or benefit shareholders.
He added in yesterday’s statement that he would also quit his voluntary role as a trustee of Cancer Research UK. However, it is understood he remains a senior independent director at catering giant Compass and chairman of Money Barn.
In full: Sir James Crosby statement
“Friday’s report from The Parliamentary Commission on Banking Standards made for very chastening reading. Although I stood down as CEO 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 would therefore like to repeat today what I said when I appeared in public before the Commission in December; namely that I am deeply sorry for what happened at HBOS and the ensuing consequences for former colleagues, shareholders, taxpayers and society in general.
Shortly after I left HBOS, I received the enormous honour of a knighthood in recognition of my own - and many other people’s - contribution to the creation of a company which was then widely regarded as a great success. In view of what has happened subsequently to HBOS, I believe that it is right that I should now ask the appropriate authorities to take the necessary steps for its removal.
During the course of my 30-year career, including 12 years at Halifax and HBOS, I both contributed to and built up a substantial pension entitlement. This pension entitlement is entirely contractual in nature. However I have decided to forego 30 per cent of my gross pension entitlement payable to me during the rest of my lifetime.* I will be
discussing how this reduction is implemented, and whether the amount waived should go to support good causes, or benefit shareholders, with the pension scheme’s employer and trustees.
It is with great personal sadness that I have decided to stand down from my voluntary position as a trustee of Cancer Research UK. They do remarkable work and it has been a great privilege and pleasure to have played my part. However I want to put their interests firmly before mine and would wish them every success in the future.
Throughout my business career I have always tried to act with integrity and to the best of my abilities. I have had the enormous privilege of working with people and organisations about whom I cared deeply. I would like to express my sincere regret for events and my appreciation for the personal support I have been shown.”
* The current annual pension payment amounts to c£580,000 per annum.