Saunders flies back to face regulator

Robin Saunders, the star financier whose reputation has taken a dive in the past two weeks, will fly back to the UK today to defend herself in the final stages of the investigation into her department by the German banking regulator.

Ms Saunders, who has spent the bank holiday visiting her parents in Florida, will return to her desk at WestLB tomorrow in a bid to halt the animosity against her which is thought to be developing among some executives.

The German regulator, BaFin, decided to look at Ms Saunders' principal finance division after it emerged that WestLB had to make a £350m provision against losses incurred by Box Clever, the TV rentals business loaned £850m by Ms Saunders' department. BaFin is expected to pass its findings to the bank next week. Ms Saunders is expected to have further discussions with the regulator in the next few days in a bid to allay concerns that WestLB took too much risk on to its own books over the Box Clever deal.

Ms Saunders must also mount a serious internal charm offensive over her proposed £1bn acquisition of AWG. AWG has rejected Ms Saunders' informal offer of 520p to 545p a share, putting her under pressure to increase the bid to closer to the 600p the water company wants. Ms Saunders needs the support of WestLB's board to increase the offer - a doubtful scenario given the controversy which now surrounds her.

The bank made a statement last Friday supporting its most high-profile employee. It also attempted to silence criticism that Ms Saunders and her team had a serious conflict of interest because of personal investments they hold in a number of companies to which their department has lent money. Jurgen Sengera, chief executive of WestLB, underlined the importance of the BaFin investigation when he said at the bank's results 10 days ago: "You asked about my support for Robin Saunders. I think we should be fair to all and wait for the result of the investigation and then we will make a statement."