Sir James Crosby may have presided over one of the worst examples of financial management in history, but he has showed that he’s never too old to learn. The former chief executive of HBOS has asked for his knighthood to be removed, and voluntarily requested to give up 30% of his £580,000-per-year pension after the publication last week a Banking Standards Commission report into the collapse of the bank. Sir James was connected with the management and strategy decisions which led to the bank writing down a staggering £30bn between 2008 and 2011, when the bad debts incurred previously began to be unravelled.
Sir James cannot fail to have been influenced by the public furore which took place just under four years ago, when RBS chief executive Sir Fred Goodwin was very publicly put in the stocks and bore the brunt of the public’s desire for a visible scapegoat following the economic crash of 2008. Goodwin, of course, held out for a good while before being stripped of his knighthood – despite the only precedents for this being when recipients have been convicted of crimes, or struck off professional bodies – and then finally giving up £200,000 of his £703,000-a-year pension. His initial refusal to accept even this relatively moderate reduction merely exacerbated the public’s desire for revenge, whilst seeming to confirm their worst views on bankers.
Sir James has very clearly decided to act before he too receives the abuse of the public, though, like Goodwin, despite losing a substantial percentage of his income, he is still receiving a giant sum of money relative to the many workers who lost their jobs directly, or indirectly, as a result of his decisions and the bailout of the banks. It is smart PR by Crosby to act so soon with a ‘pre-emptive strike’, but effectively it changes nothing; the losses have been made, and he is still very comfortably off. It also does little to prevent the next chief executive taking similar risks – the downsides of reckless decision-making will still seem small. Nonetheless, with public anger not at the levels of a few years ago, he has probably done enough to escape a torrent of vitriol. If only he had made such smart decisions when running HBOS, then his latest moves would not have been necessary.