Former HBOS chief executive Sir James Crosby 3said he wanted to be stripped of his knighthood and would give up 30% of his £580,000 a year pension after last week's scathing report into the bank's collapse.
Sir James, who stepped down from his role with private equity firm Bridgepoint on Friday, said he was "deeply sorry" for what happened at HBOS and the "ensuing consequences" for the bailed-out bank's staff, shareholders and taxpayers.
The bank's former boss was given a knighthood after leaving HBOS in 2006, but said he believed "it is right that I should now ask the appropriate authorities to take the necessary steps for its removal".
The Parliamentary Commission on Banking Standards claimed in Friday's report that Sir James was the "architect of the strategy that set the course for disaster'' and held primary responsibility for the collapse along with former chairman Lord Stevenson and fellow chief executive Andy Hornby.
Their "toxic'' misjudgments were blamed for the bank's downfall and £20.5 billion taxpayer bailout at the height of the financial crisis and the commission said they should not be allowed to work in the financial sector again.
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."
His decision to forgo 30% of his pension will still leave him with an annual payout worth £406,00. He said he was also standing down from his voluntary position as a trustee of Cancer Research UK, with "great personal sadness", and as non-executive director of catering company Compass Group PLC.
John Mann, an MP and member of the Treasury Select Committee, called for other disgraced bankers to follow Sir James's lead.
He said: "At last we have a banker who is prepared to say he got it wrong and wishes to make amends. I hope now that this is not an isolated stance and others will follow his example and give up some of the grandeurs of power and pension benefits that they have gained on the back of poor leadership in the banks."