EUROPEAN LENDERS TAKE LIBOR SCANDAL HIT

The spreading scandal over the manipulation of key lending rates and the downturn of Europe's economy took their toll on two of teh region's lending investment banks, Deutsche Bank and UBS, which both revealed increased provisions an sharp profit falls. Both both are caught up in the scandal around the alleged manipulation of the London Interbank Offered Rates (LIBOR) and related benchmark lending rates and on Tuesday topped up their estimates for litigation risk by a combined 580 million pounds. This reflects in part the expected costs of settling regulatory probes round the world. Barclays last month padi 290 million pounds to settle its case with regulators in the UK and US over the Libor affair in a move that led within days to the resignation of the bank's top three directors, including Bob Diamond, chief executive. The dual impact of recent banking scandals, including the Libor, and struggling profitability has lked to a crisis of confidence in the sector. Sentiment has been particularly bleak in Europe amid growing anxiety that the eurozone crisis will worsen over the coming months. In the three months to the end of June, Deutsche increased its estimate on unprovisioned litigation cost from 2.1 to 2.5 million euros, while UBS added 210 million swiss francs to its litigation and regulatory provisions. Both banks were hit by the ongoing impact of the economic downturn, with net profits for the three months to June falling 58% at UBS and 46% at Deutsche.