Shots in the arm of fresh capital and support from foreign partners this year have helped them recuperate, sparing them the disgrace of going under or being taken over by the government.

But more transfusions are still necessary before the eight Thai private banks still in business are back on their feet, and that process will be arduous and take time, sector analysts say.

Their huge bad loans provisions and billions of dollars in bad loans will keep them in the red until mid-2000.

Moody's Investors Service said last week the banking sector remained in deep crisis. It rated Thai banks as "heavily insolvent in true economic terms".

"Although the largest banks in the capital-starved system have been able to move closer to satisfying current regulatory requirements for loan loss provisioning, the mid-sized and smaller banks remain well behind," Moody's said.

Other ratings agenciesand analysts were more bullish.

Fitch IBCA said on Thursday it believed the government remained "unstinting in its pursuit of structural reforms".

Bank recapitalisation was well advanced, and successful passage of key legislation had set the stage for accelerated corporate restructuring, it added.

IBCA could, after upgrading Thailand's sovereign ratings to investment grade, push up ratings for most major Thai banks soon.

Of the 14 Thai banks operating before the July 1997 baht devaluation, which triggered Thailand's worst economic crisis, one has been shut and four nationalised and put up for sale.

Another is about to be taken over and another two have been taken over by foreign buyers.

Thai banks carried a combined loss of over 330 billion baht ($8.9 billion) in 1998, of which 197 billion came from the eight private banks.

Capital Nomura Securities Plc expects the eight banks to face another 193 billion baht in combined losses this year, with Krung Thai Bank Plc alone set to post a 108 billionbaht loss.

Other research houses expect the 1999 losses of these banks to range from 139 billion baht to 225 billion baht.

Private banks are saddled with non-performing loans estimated at 42 per cent of total lending and nationalised banks carry much higher NPL levels, of nearly 70 per cent.

Private banks have raised over 400 billion baht of fresh capital since 1998, while flotation of another 108 billion baht of equity is in the pipeline, according to the central bank.

Moody's estimates that recapitalisation by private and state-owned banks exceeded 700 billion baht in the past 18 months and forecasts they may need another 700 billion of funds.

Recent bank recovery has been aided by plunging Thai interest rates, an improving economy and new bankruptcy and foreclosure laws that have helped speed up corporate loan restructuring.