James Crosby
James Crosby was HBOS chief executive between 2001 and 2006 (Reuters)

James Crosby has handed back his knighthood and will forego 30 percent of his pension after a damning report by the Banking Standards Commission accused him and other HBOS executives of a "colossal failure" over the bank's collapse during the financial crisis.

Crosby was HBOS chief executive from 2001 to 2006 and was accused by the Commission's report of being the "architect" of the bank's demise, which saw it merged with Lloyds Banking Group in 2009 amid a £20.5bn government bailout to save it from masses of toxic loan assets built up before the financial collapse.

"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," said Crosby in a statement.

"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."

Crosby added that he was "deeply sorry for what happened at HBOS and the ensuing consequences for former colleagues, shareholders, taxpayers and society in general."

As well as handing back his knighthood, he will also give up £7.5m of his £25m pension pot.

He had been given his title by the Queen in 2006 for services to the financial industry. Crosby went on to serve at industry regulator the Financial Services Authority (FSA) as deputy chair until 2009.

Crosby follows Fred Goodwin, the former boss of the Royal Bank of Scotland, who was also forced by public anger to give up his knighthood when the scale of his mishandling of his bank - which is now 82 percent owned by the taxpayer after a government bailout to save it from collapse - was fully realised.