The position of Germany's Bundesbank president, Mr Ernst Welteke, looked untenable last night as the board of the central bank met to decide his future and state prosecutors began investigating his stay at a deluxe Berlin hotel two years ago.

Mr Welteke, 61, said yesterday he "no longer ruled out resigning" and apologised for suggesting that it was acceptable to let Dresdner Bank pay for a four-night stay at the Adlon Hotel in Berlin with his wife and family that cost €7,661.

"I most sincerely regret... if the impression arose that I myself would not adhere to the high standards to which the Bundesbank, as an independent institution, is obligated," said Mr Welteke, referring to weekend remarks in Punchestown that he was a victim of a smear campaign and that he felt entitled to let a private bank pick up the bill for a partly private holiday.

Mr Welteke attended a euro launch party for Dresdner Bank on December 31st, 2001, and participated in other events organised by the bank the following day. However he stayed a further two days in a suite costing €1,700 a night at Berlin's Adlon Hotel.

The board of the Bundesbank is expected to reach a decision on Mr Welteke's future this morning, after deciding whether letting Dresdner pay the hotel bill breaches rules banning civil servants from accepting gifts. State prosecutors in Frankfurt confirmed yesterday that they were also investigating whether the perk was illegal.

On Monday, Mr Welteke issued a statement saying the matter of the hotel bill was a "misunderstanding" and that the Bundesbank would pay half the bill as business expenses back to Dresdner, while he would pay the other half as a private holiday.

But his attempt to defuse the row only fanned the flames.