Former HBOS chief executive Sir James Crosby has stepped down as non-executive director of catering firm Compass Group and said he wants to be stripped of his knighthood in the light of last week's scathing report into the bank's collapse.
Sir James, the bank’s former chief executive, made the request in a personal statement issued after he was sharply criticised in a damning report into its failure by the Parliamentary Commission on Banking Standards.
The bank was worth more than £40bn at its height but had to be rescued by Lloyds in a Government-brokered deal during the financial crisis and was largely responsible for the subsequent £20bn taxpayer-funded bailout of Lloyds.
The Commission’s report created a major headache for Prime Minister David Cameron as MPs and their Holyrood counterparts, including members of his own party, queued up to call for Sir James to be stripped of the knighthood that he was awarded for services to banking.
Mr Cameron played a key role in the removal of the same honour from Fred Goodwin, the former Royal Bank of Scotland boss, who was held responsible for that bank’s collapse and subsequent rescue by the state.
However, Mr Cameron’s actions on that occasion sparked anger in the business community. Leading businessmen claimed that Mr Goodwin had been denied “due process”. On Tuesday he had indicated there would be no similar move in the case of Sir James.
In his statement Sir James said the Commission’s report “made for very chastening reading”.
He said: “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.” The Cabinet Office said it believed this was the first time anyone had voluntarily given up a knighthood.
Mr Goodwin was forcibly stripped of his honour by the Queen on the advice of the Forfeiture Committee, made up of senior civil servants. It was announced in the London Gazette that he had brought the system into disrepute.
Mr Goodwin had already agreed to give up part of his pension and in his statement Sir James said he would take a similar step and hand back 30 per cent of an annual payment of £580,000. In contrast to Mr Goodwin, whose shares in RBS were made worthless by its collapse, Sir James had managed to sell two-thirds of his stake in HBOS before its rescue.
In the statement, Sir James sought to counter criticism from members of the Commission who said that the apologies offered by himself, HBOS chairman Lord Stevenson, and his successor Andy Hornby, rang hollow.
Sir James said: “Although I stood down as CEO of HBOS 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 appeared in public before the Commission… that I am deeply sorry for what happened at HBoS and the ensuring consequences for former colleagues, shareholders, taxpayers and society in general.”
He also said he would, “with great regret”, stand down as a trustee of Cancer Research UK.
Here is the statement issued by Sir James Crosby in full:
"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% 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.
Captains of finance: Tarnished knights
Sir Tom McKillop
Knighted for services to the pharmaceutical industry in 2002 but it is his time as chairman of RBS that has drawn the most criticism. He was at the helm alongside Fred Goodwin (who was stripped of his knighthood) between 2006 and 2009 when the bank ran up enormous debts buying ABN Amro. After taking retirement in 2009, Sir Tom apologised to the House of Commons Treasury Select Committee for his role in the financial crisis.
Sir Callum McCarthy
Chairman of the Financial Services Authority from 2003 to 2008. He was the regulator on deck when the banking system hit the iceberg. Subsequent examination by the House of Commons Treasury Select Committee found the FSA and the whole tripartite system of banking regulation was at fault for failing to prevent the collapse. Sir Callum escaped censure but his tenure at the FSA will always be associated with a grand failure of policy.
Sir George Mathewson
Another tarnished RBS knight, he served as CEO of RBS between 1992 and 2001, when he became chairman of the doomed bank. He helped orchestrate RBS’s buyout of the much larger NatWest. He is seen as key force in the hard-nosed business culture of RBS which developed in the decade leading up to the financial crisis.