Breaking his silence after Friday’s damning account from the Parliamentary Commission on Banking Standards, Sir James said he was “deeply sorry for what happened at HBOS and the ensuing consequences for former colleagues, shareholders, taxpayers and society in general”.
Sir James has also quit as the senior non-executive director of Compass with immediate effect, ending days of speculation over his position at the FTSE100 catering company, reports The Telegraph.
He acknowledged that the report, which painted him as the “architect of the strategy that set the course for disaster” had “made for very chastening reading”.
The commission, chaired by Tory MP Andrew Tyrie, found a “colossal failure of senior management” and called for Sir James and two other former HBOS directors – his successor Andy Hornby and chairman Lord Stevenson – to be banned for life from the financial services industry.
Sir James, who stepped down from HBOS in 2006, 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.”
In volunteering to give up his honour, Sir James was seeking to avoid a re-run of the hounding of former Royal Bank of Scotland boss Fred Goodwin, who was stripped of his knighthood after a public outcry.
HBOS was rescued by Lloyds Banking Group at the height of the financial crisis in 2008 but still required a £30bn taxpayer bail-out. Sir James was lambasted by the commission for putting in place a “culture of perilously high–risk lending”, where shoddy risk controls produced an “accident waiting to happen”.
Sir James said he would also give up 30pc of his “substantial pension entitlement”, though the cut will still leave him with an index-linked £406,000 this year that will rise with inflation.
That is more than the £342,500 a year Mr Goodwin was left with in 2009 when he volunteered to cut his own pension by £200,000 annually. He had originally retired on £703,000 a year but that was reduced to £555,000 after he took out a £2.8m lump sum.
Of his own pension cut, Sir James said: “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.”
He added that “with great personal sadness”, he had also decided to stand down as a trustee of charity Cancer Research UK. On Friday, within hours of the report’s publication, Sir James resigned from his role as an adviser to private equity firm Bridgepoint Capital.
Sir James said: “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.”
As chief executive of the Halifax bank, Sir James oversaw 2001’s merger with Bank of Scotland to create HBOS and ran the group until 2006.
A friend of Sir James said: “He did not want to end up like Fred Goodwin hounded for the rest of his life. He wanted to be able to look people in the eye and say he did the right thing. Part of him wanted to fight but he did not think it was tenable. He has a business career, he does not want to stop.”
Labour MP John Mann, who sits on the Treasury Select Committee, welcomed Sir James’s actions, saying: “This sets the benchmark for others and it is a highly appropriate. At last we have a banker who is prepared to say he got it wrong and wishes to make amends.” He added on Twitter that the step Sir James had taken “meets exactly my demands”.
However, John Cridland, director-general of the CBI employers lobby group, said: “I think it’s a very personal decision and I can imagine for James Crosby quite a painful one. But because it’s personal I don’t think you can draw too many lessons.
“I wouldn’t go as far to say it’s unique because you could conceive of situations where other corporate failures raise questions over honours. But I think it would be unfair if this were seen to be normative behaviour in that you were expected to do this.”
One senior banking figure said: “I think this is a damage limitation. I don’t see it as a redemption.”
Lord Stevenson did not return calls requesting comment, though he received his honour before chairing HBOS and draws no pension from the company.
Lord Oakeshott, the Liberal Democrat peer, said Sir James had done the right thing, adding: “Clearly it’s not sustainable for Andy Hornby not to follow.”