Former HBOS chief executive Sir James Crosby says he will ask for his knighthood to be removed and will forego 30 per cent of his pension after last week’s report into the bank’s collapse.

Sir James, who stepped down from his role with private equity firm Bridgepoint on Friday, said he was “deeply sorry” for what happened at HBOS and the “ensuing consequences” for the bailed-out bank’s staff, shareholders and taxpayers.

James Crosby was called “toxic” by MPs, writes Channel 4 News Business Correspondent Sarah Smith. But until today he was still called “Sir”. Now he is to hand back his gong.

In a statement, he said: “Shortly after I left HBOS is received the enormous honour of a knighthood. 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.

By “what happened subsequently”, he means the near collapse of HBOS, the £30bn of taxpayers’ money that had to prop it up, a catastrophe blamed on Sir James by the Parliamentary Commission on Banking.

He was eventually forced to admit it was not the financial crisis that crippled HBOS, it was catastrophic management failure.

Ignominious fate

Sir James clearly wants to avoid the ignominious fate of his friend, Fred Goodwin, who was humiliatingly stripped of his knighthood and forced to give up a chunk of his pension.

Crosby is on a pension of around £580,000 a year. He is giving up 30 per cent of this, meaning he will have to struggle by on just over £400,000 a year.

Crosby has already resigned from private equity group Bridgepoint, and today he stood down as trustee of Cancer Research. He did not mention his directorship of catering firm Compass, where he is paid £125,000 a year. But he is expected to be ousted from there soon.

Parting company

Channel 4 News understands that Compass Group, one of Britain’s largest catering firms, is preparing to part company with Sir James from its board following a damning report from the banking commission which exposed “catastrophic failures” while he was boss of the failed Scottish bank HBOS, writes Channel 4 News Business Correspondent Siobhan Kennedy.

Compass won’t say when an announcement will be made, but in the absence of a supportive statement backing him, a source said it’s only a matter of time.

The Business Secretary Vince Cable is going after him too, seeking to have Sir James and his fellow former HBOS executives, Lord Stevenson and Andy Hornby, barred from ever standing as company directors again. Some MPs even want him stripped of his pension.

And let’s not forget what started all this. A call from the members of the banking commission, including none other than the Archbishop of Canterbury, to have HBOS triumvirate barred from ever working in financial services again.

So the knives are well and truly out but the reality is it could take a long time to turn any of these demands into reality, and the path will be legally fraught.

Barred from the City?

For starters, a source at the new banking regulator, the Financial Conduct Authority (FCA), told me that to bar Sir James and the other HBOS executives from the City will require fresh evidence and, potentially a fresh investigation.

The old regulator, the FSA, had already conducted one probe into wrongdoing at HBOS and concluded that only Peter Cummings, the former head of corporate lending, should be fined and struck off.

Given it had all the resources at its disposal and didn’t find against Sir James, Lord Stevenson or Andy Hornby, was there any new evidence in last week’s Banking Commission report to convince the regulator this time round? (And if there is, it’s also pretty embarrassing the FSA it didn’t unearth the truth itself).

Thankfully for the FCA, it hasn’t yet published its full report into HBOS, that’s due in the next few months. So there is still a chance it could reach new conclusions about the HBOS three and decide, after all, that they should be barred and fined, just like Mr Cummings. Certainly it will be under real pressure to do so.

Disqualification as directors?

Given the industry’s own regulator hasn’t so far found against them, how likely is it that Vince Cable will be able to go one step further?

To use section eight of the company director disqualification act to ensure that Sir James, Lord Stevenson and Mr Hornby are found, five years after the event, not fit or proper to serve as directors of any companies at all?

It feels like something of a stretch to me. But a source inside the Solvency Service (which is carrying out the investigation on Dr Cable’s behalf) said a section eight can be brought using information obtained from an enquiry. As such, it’s eagerly awaiting the outcome of the regulator’s HBOS investigation. Even more pressure for it to deliver this time round.

As for forcing Sir James to give up some of his near £700,000 a year pension? That seems even less likely, given it would be a voluntary measure.

And given the lack of political will to force him to do so. MPs may be demanding some of the pension is clawed back but neither David Cameron or George Osborne appear to have any will to force it through.

Surprising, given Channel 4 News understands that Sir James took advantage of a special “good leaver” clause that allowed him to retire from HBOS early, at 50, and begin to draw down his pension pot immediately.

You’d think that would definitely get David Cameron’s moral compass gyrating, but so far, not a flinch.