Royal Bank of Scotland is to set aside more than £3 billion in additional funds to cover litigation and customer compensation claims, the state-backed lender disclosed today.
The sum includes £1.9 billion to cover mainly US action over mortgage-backed financial products.
There will also be an extra £465 million to cover a redress scheme for customers mis-sold payment protection insurance (PPI).
The group has set aside an extra £500 million in relation to allegations over the mis-selling of complex financial products, known as interest rate swaps, to small firms.
There will also be an additional £200 million of provisions "for various conduct related and legal expenses" when fourth quarter results are published next month, said the bank, which is 80% taxpayer owned.
Chief executive Ross McEwan said: "At the peak of the financial crisis, RBS was the biggest bank in the world.
"When the crisis broke the bank was involved in a number of different businesses in multiple countries that have subsequently faced heavy scrutiny by customers and regulators.
"The scale of the bad decisions during that period means that some problems are still just emerging. The good news is we are now a much stronger bank and can manage these costs while still supporting our customers."
The bank also confirmed that its executive committee would not receive bonuses for their performances in 2013. The announcement applies to eight senior employees. Mr McEwan has already said he would not take a bonus for 2013 or 2014.
The extra £1.9 billion for mortgage-backed securities was announced "following recent third party litigation settlements and regulatory decisions".
In November, the US Government and JP Morgan Chase agreed a record 13 billion US dollar (£7.8 billion) settlement over its sales of poor quality mortgage-backed securities that collapsed in value during the financial crisis.
Meanwhile in the same month, an RBS subsidiary agreed to pay 153.7 million US dollars (£95.5 million) to settle a US probe into allegations it misled investors over what was described as a "shoddy" subprime mortgage product.
In relation to PPI, RBS said claims had continued at the same rate as before - £225 million per quarter - rather than an expected decline, and that they were now anticipated to continue for a longer period.
The total provision for the PPI compensation scheme now stands at £3.1 billion, of which £2.2 billion had been used up by the end of 2013.
RBS chairman Sir Philip Hampton maintained that the bank had to be able to pay staff "competitively" as he was pressed over plans for bonus payments.
Labour is calling on the Government, as the majority shareholder, to block any request for permission to pay bonuses of up to double an employee's salary.
Sir Philip confirmed that the bank had been having a "shareholder consultation" over the issue.
He said: "We think that the right positioning of the business is to be commercial.
"We obviously need to be sensitive to our shareholding structure and the political and media issues around that but the ability to pay competitively we think is fundamental to the prospect of getting to where we need to be."
Meanwhile Mr McEwan said the bonuses not being paid for 2013 to members of the executive committee was a "leadership" issue - even though they were not responsible for the "past mistakes" that continued to dog the bank.
The bank is already facing bad debt write downs of up to £4.5 billion in the creation of an internal "bad bank" to wind down toxic loans, with faster than expected progress doing this to result in higher fourth quarter costs.
It was expected when this was launched that this would result in substantial full-year losses - which will be added to by today's announcement.
Finance director Nathan Bostock would not comment when asked whether these would swell to £8 billion, which would be the largest since it lost £24.1 billion in 2008.
Mr McEwan said: "Billions of pounds have been spent to resolve conduct and litigation issues in recent years. Costs on this scale were not predicted by anyone when RBS was rescued in 2008.
"They come in addition to the costs of restructuring the bank's bad assets and restoring its funding to prudent levels after the financial crisis.
"They were a key reason we took the difficult decisions to reset our capital position last November.
"After five years of hard work and tough choices, the path ahead for RBS is much clearer. We have restored our fundamental soundness and have the financial strength to deal with issues like this.
Andrew Tyrie, chairman of the Treasury Select Committee, said: "RBS is still paying a heavy price for past misconduct.
"So too are its customers and taxpayers. It is crucial for the recovery that lending, particularly to SMEs, (small and medium enterprises) is not constrained as a result."
He stressed the need to change the way bonuses are paid since little of the pay-outs relating to the period covered by past errors could be clawed back.
Business Secretary Vince Cable said the figures showed just how much damage the bank had caused and he welcomed the determination shown by the new management to return traditional banking values and behave in a "responsible" manner.
"It is an absolutely shocking story that the British taxpayers are still paying for the excesses of this bank in the boom period before it collapsed in 2008," he told BBC News.
"We had senior executives paid enormous amounts of money, taking risks that backfired and caused enormous damage and cost to the taxpayer. I think the fact that the current crop of directors are accepting responsibly, not accepting bonuses, is sending the right signal."