The provisions dragged down RBS shares and rounded off a bad day for the FTSE overall.
The lender is now expected to have made a loss of around £8bn for 2013, its worst performance since 2008 – the year it collapsed and had to be bailed out by the government.
The fourth quarter is shaping up to be a bad period for banks – last week Deutsche Bank had to publish its figures early, surprising markets with made a loss of €1.2bn (£990m).
Yesterday RBS put aside an extra £465m for interest rate swaps compensation to small business, and £500m more for payment protection insurance claims. It also expects a raft of bills over mortgage-backed securities sold before the crisis.
Most of the remaining £1.9bn covers those sales – recent settlements with US authorities have cost banks like JP Morgan and Deutsche Bank billions of dollars.
Chief executive Ross McEwan admitted the bank’s woes are not yet over, as it is involved in a range of other probes into benchmarks in markets like foreign exchange.
“We did run a very big bank and it is unfortunate that when these things emerge, we are there,” he said.
McEwan will not receive a bonus for 2013 or 2014, and the eight other members of the executive committee will also forego any 2013 bonus.
Chairman Sir Philip Hampton said he is consulting shareholders on paying bonuses of up to 200 per cent of their salaries, to meet the new EU bonus cap. The government holds 81 per cent of the shares.
RBS shares fell 2.2 per cent and the FTSE 100 closed down 1.7 per cent.