JAMES Crosby, the former chief executive of HBOS, has been formally stripped of his knighthood at his own request after a scathing Westminster report into the collapse of the Scottish bank.

It follows a meeting of Whitehall's Honours Forfeiture Committee where Mr Crosby's move to shed his honour, bestowed in 2006 for services to the finance industry, was accepted.

Mr Crosby asked to have the honour removed after the Parliamentary Commission on Banking Standards claimed he had been the "architect of the strategy that set the course for disaster" in his handling of HBOS, which went on to receive a bailout of almost £30 billion of public funds.

Mr Crosby, 57, a former deputy chairman of the Financial Services Authority (FSA), follows in the footsteps of Fred Goodwin, the former head of the Royal Bank of Scotland, who lost his knighthood for his role in the bank's near-collapse, which led to a £45bn taxpayer bailout.

While both men had their knighthoods removed by a Whitehall committee, a decision ratified by the Queen, Mr Crosby gave his up voluntarily following the furore surrounding executive conduct at the bank.

Nadhim Zahawi, a Conservative MP, said: "It is right that the architect of HBOS's collapse has given up the knighthood that Gordon Brown gave him."

Questions have been raised about the peerage of Lord Stevenson, the former chairman of HBOS, who was heavily censured in the report of a high-powered group of MPs and peers, although peerages are technically bestowed for life.

The official announcement that Mr Crosby's honour had been withdrawn was reported yesterday in the London Gazette, the official journal of record.

It stated: "Letters Patent dated 11 June 2013 have passed the Great Seal of the Realm cancelling and annulling the knighthood conferred upon James Robert Crosby on the December 6 2006 as a Knight Bachelor."

After the commission's report in April, Mr Crosby said he would give up 30% of his £580,000-a-year pension and stood down from roles with catering firm Compass Group and private equity firm Bridgepoint. At the time, he also made clear he believed it was right that "I should now ask the appropriate authorities to take the necessary steps" to remove his knighthood.

Mr Crosby admitted the report made "very chastening reading", adding: "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 am deeply sorry for what happened at HBOS."

The commission criticised HBOS's former chiefs, including Andy Hornby, and asked the industry regulator to consider whether they were "fit and proper persons" to remain in banking.

In September, Peter Cummings, a former HBOS banker, was the first executive to be rebuked when he was fined £500,000 and banned for life from working in the financial sector by the FSA.

Lloyds took over HBOS, which owned Halifax and Bank of Scotland, at the height of the financial crisis. However, the UK Government ended up with a 39% stake in the new Lloyds Banking Group, which has since cut tens of thousands of jobs.

Meanwhile, speculation over RBS intensified last night after a hedge fund manager was unwittingly photographed in Downing Street carrying a document on the bank's future.

Davide Serra, of Algebris Investments, was seen yesterday carrying a paper entitled "Royal Bank of Scotland – the case for improving viability" .

It described the bank as "structurally attractive" but advocated it be made "'more Canadian".

Downing Street insisted Mr Serra had not met ministers but had attended a routine meeting with an official, but the meeting raised questions about the Coalition's plan to giving RBS shares to taxpayers, an idea floated by a number of ministers.