(Reuters) - Goldman Sachs Group Inc (>> Goldman Sachs Group Inc) cut the upper end of its estimate of legal costs it may face beyond what it has set aside by more than half to $2 billion.

The bank had estimated in November legal expenses of up to $5.3 billion above what it had already set aside.

The Wall Street bank, which ranked No. 1 in advising on both announced and completed mergers and acquisitions globally in 2015, is involved in a number of judicial, regulatory and arbitration proceedings.

"The uncertain regulatory enforcement environment makes it difficult to estimate probable losses, which can lead to substantial disparities between legal reserves and subsequent actual settlements or penalties," the bank said in a regulatory filing.

For the fourth quarter, the bank reported a 64 percent jump in non-compensation costs due mainly to the $1.95 billion set aside for litigation and regulatory issues.

Goldman is among several financial firms targeted by a federal-state working group probing misconduct in the sale of mortgage-backed securities prior to the financial crisis.

The U.S. Department of Justice and state officials have already extracted multi-billion dollar settlements from a number of large U.S. banks including JP Morgan Chase & Co (>> JPMorgan Chase & Co.), Bank of America Corp (>> Bank of America Corp) and Citigroup Inc (>> Citigroup Inc) over the sale of mortgage-backed securities.

Goldman in early January agreed to pay over $5 billion to settle claims it misled mortgage bond investors during the financial crisis.

The settlement underscored how Wall Street is yet to shake off the legacy of the U.S. subprime crisis, when mortgages were sold to people who could not afford them and then repackaged for investors without an adequate explanation of how risky they were.

Shares of the bank were up 0.8 percent at $148.10 in trading before the bell. Up to Friday's close, the stock had lost 18.5 percent in value since the beginning of the year.

(Reporting by Sweta Singh in Bengaluru; Editing by Anil D'Silva)