Royal Bank of Scotland is taking billions of pounds in extra charges to cover the cost of past misdeeds, sending it deep into the red and resulting in its top executives not receiving any bonuses for the past year.
The new provisions, revealed in a surprise trading update following a board meeting on Monday, are a blow to new Chief Executive Ross McEwan, who is looking to turn around the fortunes of the part-nationalized lender which was the subject of a 45 billion pound ($75 billion) government rescue in 2008.
Chairman Philip Hampton said: "RBS did suffer more than most banks in the crisis and these charges today represent an extra clearing-up of the mess that was created in the bank in the run-up to the financial crisis of 2008."
Monday's extra charges leave RBS facing more than 7 billion pounds being wiped off its 2013 profits, leaving it with a hefty loss. It said in November it would take a hit of between 4 and 4.5 billion pounds to cover losses on assets in a "bad bank" it was setting up.
Investec analyst Ian Gordon said he expected the bank would make an extra 3 billion pounds of losses on top of the 5 billion he had previously forecast for 2013, making an overall loss of around 8 billion pounds.
(Read more: RBS bonuses: Cameron to veto plans for a hike)
Finance Director Nathan Bostock, who will leave the bank to join Santander later this year, said the charges will result in the bank making a "substantial loss" for 2013.
However one of RBS's biggest 20 shareholders said the provisions were "not a shocker."
"Most people have got 3 or 4 billion pounds worth of litigation over the next few years and RBS have chosen to accelerate it a bit. It's still probably part of making it a clean story in a year or 18 months' time," the shareholder said.