James Crosby, former boss of failed British bank HBOS, offered on Tuesday to give up his knighthood and nearly a third of his pension after being denounced by lawmakers for the "colossal failure" that led to his bank's collapse. He becomes the first person to voluntarily give up a knighthood for almost a century.
Crosby, whose bank had to be bailed out by taxpayers in 2008, effectively volunteered for the same punishment as that visited on Fred Goodwin, former head of Royal Bank of Scotland, the other large Scottish bank bailed out after the 2008 financial crisis. Goodwin's knighthood was stripped last year and he gave up part of his pension in 2009.
Crosby said 30 percent of his 580,000 pound ($887,100) a year pension would either be returned to shareholders or given to charity. "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," he said of his knighthood in a statement on Tuesday.
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The government was clearly pleased with the decision. A Treasury spokesman said, "This must be a matter for an individual's conscience, but the Government believes it is right that this decision has been reached."
Crosby, 57, was awarded his knighthood shortly after stepping down as HBOS chief executive in 2006. The bank did not collapse until two years after he left it, but a report on Friday by the Parliamentary Commission on Banking Standards (PCBS) put the blame squarely on him and two other former bosses for the decisions that wrecked it.
The report said Crosby had so badly run the bank that it would have failed even without the 2008 financial crisis.
John Mann, a Labour lawmaker who has been a critic of Crosby during hearings into the banking crisis, welcomed Crosby's decision to accept blame and suggested it set an example to other failed bankers.
"At last we have a banker who is prepared to say he got it wrong and wishes to make amends," Mann said.
A knighthood is one of the highest honors an individual in Britain can achieve. A committee recommends the honor to the Prime Minister and then to the Queen.
The last person to give up a knighthood voluntarily was Nobel Prize-winning Bengali writer Rabindranath Tagore, who renounced his in 1919 in protest against the Amritsar massacre when British troops killed hundreds of civilians. Others to have been stripped of the honors include Zimbabwe's Robert Mugabe, Romania's Nicolae Ceausescu and former spy Anthony Blunt.
"Set the Course for Disaster"
The PCBS, tasked with finding ways to reform Britain's banks, said Crosby had been the "architect of the strategy that set the course for disaster" at HBOS.
Crosby set the strategy that saw HBOS lose billions of pounds from reckless lending to companies and a disastrous expansion into Ireland and Australia. After its bailout by the state, the bank was acquired by rival Lloyds Banking Group.
Crosby said the report was "very chastening reading" and he was "deeply sorry for what happened at HBOS and the ensuing consequences for former colleagues, shareholders, taxpayers and society in general".
Crosby's pre-emptive action means he effectively volunteers to share the fate of Goodwin, whose knighthood and lavish pension became a focus of public anger and attracted venomous denunciations from politicians after the financial meltdown.
Crosby said he would discuss with the pension scheme's trustees how the reduction in his pension would be implemented and if the amount waived should go to support good causes or benefit shareholders.
Under his proposal, he would still receive 406,000 pounds a year, to add to almost 8 million pounds he was paid during his tenure as HBOS's chief executive. He said his pension had been built up over his 30 year career, including 12 years at Halifax and HBOS, and was "entirely contractual in nature".
Compass Group, the world's biggest catering company said late Tuesday Crosby decided to step down as non-executive director, with immediate effect.
Crosby resigned as an adviser to private equity firm Bridgepoint on Friday. He remains the chairman of Moneybarn, a small West Sussex company that lends to people with a bad credit history.
Moneybarn declined to comment. After leaving HBOS, Crosby advised former Prime Minister Gordon Brown and became deputy chairman of the Financial Services Authority (FSA), stepping down from that role in February 2009 after criticism of his role at HBOS.