Barclays has increased the provisions to cover two mis-selling scandals by another £1bn.
It relates to the mis-selling of interest rate hedging products sold to small firms, and payment protection insurance (PPI) schemes.
Following a review, the bank said total provisions for the scandal involving interest rate swaps were now £850m, and £2.6bn for the PPI schemes.
The figure comes ahead of the bank's full-year results due on 12 February.
Review of sales
The Financial Services Authority (FSA) last week ordered the UK's major banks - Barclays, Royal Bank of Scotland, Lloyds, and HSBC - to review all their sales of interest rate hedging products, and provide redress where mis-selling occurred.
The products were offered to thousands of small firms - including pub owners, haulage firms, care-home operators and vets - when they asked their bank for a loan.
The borrowers were told that the product would provide an "insurance" or "hedge" against the risk of interest rates rising. But with interest rates having instead fallen since 2008 to historic lows, many of these businesses discovered they were sitting on tens of thousands of pounds in losses.
The FSA said that around 40,000 interest rate hedging products were sold since December 2001 to "non-sophisticated" customers, to protect against interest rate rises or limit interest rate fluctuations.
In its review of 173 such sales across the four banks, the FSA said it found that more than 90% did not comply with one or more of its regulatory requirements.
Barclays increased its provision by £400m, nearly doubling the total amount it has set aside for compensation.
Barclays chief executive Antony Jenkins later told the parliamentary committee on banking standards that compensation would be paid as quickly as possible. He said that this would be an easier process than redress for PPI, as more information about those affected was available.
He also said that the payments meant staff would get smaller bonuses as a result.
The FSA has called on banks to deal with the issue within six months, although some cases could take longer.
The bank has increased its PPI provision by £600m. The total amount of £2.6bn was still well below the £5.3bn set aside by Lloyds Banking Group.
Financial institutions sold PPI alongside loans, credit cards and mortgages. It was supposed to cover loan repayments if policyholders were ill, had an accident, or lost their job. However, the policies were mis-sold to large numbers of people who would never have qualified for or needed to make a claim. Some did not even know they were paying for PPI.
Mr Jenkins told MPs that PPI was mis-sold at Barclaycard - which he ran - up to 2009, when it stopped selling the product.
Millions of people have now received compensation from banks, receiving a typical payment of nearly £3,000. The total bill facing UK institutions for PPI stands at approaching £14bn, but it is expected to go higher.
Some 11,000 complaints a week are being made to the financial ombudsman in cases which are unresolved by the banks.
With their finances under pressure, the banks have asked the FSA to impose a deadline on complaints, but the regulator has not agreed to one.
But Richard Lloyd, executive director of consumer group Which?, said: "The banks should be proactively contacting their customers and making sure it is as easy as possible for those with a legitimate claim to get their money back, without any hassle."
Barclays' latest provisions announcement comes just a week before Mr Jenkins is expected to unveil a blueprint for overhauling the bank's culture.
Its finance director Chris Lucas announced over the weekend that he was stepping down.
The bank has already been handed a record £290m fine by UK and US regulators related to a separate Libor-rigging scandal.