Crosby is the second former head of a UK bank to have his peerage removed, after Fred Goodwin, the former chief executive of Royal Bank of Scotland, was stripped of his last January.

Earlier this year a Parliamentary Report slammed Crosby’s stewardship of the UK’s largest mortgage lender HBOS (Halifax, Bank of Scotland), describing him as “architect of the strategy that set the course for disaster”.

He held the position of CEO from 2001 to 2006, and was awarded the knighthood in the Queen’s Speech in the June after he left.

In 2003, the man known as Gordon Browns ‘favourite banker’ was appointed to the board of the Financial Services Authority, the regulator which has since been dismantled after a flood of criticism of its failures.

In April this year Crosby apologised and asked for his knighthood to be removed, and voluntarily gave up 30% of his £580,000 per year pension. He is believed to have taken home bonuses in excess of £3m between 2001 and 2005.

Attention is expected to focus next on other businesspeople who help senior roles during the build-up to the credit crisis, including Crosby’s former chairman at HBOS Lord Stevenson, and former chairmen of Royal Bank of Scotland Sir Tom McKillop and Sir George Mathewson.