PRESSURE is mounting on all disgraced former directors of Halifax Bank of Scotland (HBOS) to pay for their actions after the one-time head of the bank offered to surrender his knighthood in a bid to avoid becoming a hate figure like Fred Goodwin.

Sir James Crosby also announced he would hand back one-third of his pension, reducing his package to just in excess of £400,000 a year, and his resignation from the board of catering company Compass. He remains chairman of the car credit company Money Barn.

Sir James said he was "deeply sorry" for what had happened at HBOS, which was bailed out with £20 billion of taxpayers' money at the height of the 2008 banking crisis.

He has faced days of pressure over both his knighthood and his pension after a damning report by the Parliamentary Commission on Banking Standards found he was the "architect of the strategy that set the course for disaster".

MPs and peers found he held primary responsibility for the bank's collapse along with Lord Stevenson and fellow chief executive Andy Hornby.

Expectations are rising that his former colleagues will now seek to redress their failings at the institutions, with MPs saying Sir James's move should not be "isolated".

John Mann, Labour MP and a member of the Commons' Treasury Committee, said: "This sets the benchmark for others and it is highly appropriate. At last we have a banker who is prepared to say he got it wrong and wishes to make amends.

"I hope this is not an isolated stance and others will follow his example and give up some of the grandeurs of power and pension benefits they have gained on the back of poor leadership in the banks."

Mr Hornby is currently head of betting and gaming group Gala Coral, which last week said he had its "complete backing".

Tory MP Mark Garnier called for changes to the system which currently has no mechanism to expel members of the House of Lords.

However, Lord Stevenson could resign his life peerage, which he received in 1999, as pressure mounts on the failed banking chiefs.

Mr Garnier, a member of the Banking Commission, which is examining the structure of the industry, said Sir James had not gone far enough.

"At the end of the day, what we do need is some personal accountability that goes farther than losing a knighthood and a proportion of a very large pension," he said.

In the wake of the report, Sir James resigned from his role with private equity firm Bridgepoint, but the move was not adequate to stem the tide of public anger against him, prompting yesterday's announcement.

He was given a knighthood after leaving HBOS in 2006, but said he believed "it is right I should now ask the appropriate authorities to take the necessary steps for its removal".

Sir James said the report made for "very chastening reading".

He added: "Although I stood down as CEO of HBOS in 2006, some three years before it was taken over by Lloyds, I have never sought to disassociate myself from what has happened.

"I would therefore like to repeat today what I said when I appeared in public before the commission in December; namely that I am deeply sorry for what happened at HBOS."

Sir James's decision on his knighthood avoids the humiliation of potentially being stripped of his honour, as happened with former RBS chief executive Goodwin last year.

Mr Goodwin had earlier been forced to agree to a £342,500-a-year pension, down from an original sum of £702,000.

Regulators have already been asked to look at whether all three key operators at HBOS could be barred from ever working in the City again.

However, that investigation is not expected to begin until the publication of a report by the Financial Conduct Authority (FCA), which could take months.

Sources close to the FCA earlier said it was unlikely the men would be stripped of their right to work in finance unless new evidence emerged.

The regulator has only acted against one former HBOS director, Scots-born Peter Cummings, who was last year fined £500,000 and was banned for life from working in the sector.But in its report the Banking Commission warned it was wrong that Mr Cummings alone should shoulder the blame for HBOS's collapse.

Last night, Scottish Conservative MSP Murdo Fraser, who had called for Sir James to lose his knighthood, welcomed the decision.

He said: "Clearly there were significant levels of public outrage at his behaviour."

The SNP's Treasury spokesman Stewart Hosie, who is also a member of the Treasury Select Committee, said Sir James had "clearly done the right thing" to forgo his knighthood and some of his pension.

Kate Devlin