THE twists and turns in the country's financial upheavals have completely changed the mission of Dr Vichit Suraphongchai, chairman of Radanasin Bank or ''the good bank''.

Late last year, when the former president of Bangkok Bank and ex-transport and communications minister agreed to head Radanasin, he shared a growing concern at that time that if nothing was done, the good assets of the insolvent finance companies would quickly melt down. Asset prices would melt down, affecting the entire economy, particularly financial institutions.

Then, the combined assets of the 56 finance companies stood at Bt800 or Bt900 billion, half of which was believed to be bad loans. After suspending the operations of 16 finance companies in June 1997 and another 42 in August 1997, the government took another three months to justify its difficult decision to close them down. In fact, these zombies were dead on Day One of their suspension.

In those three months, the asset quality of the 56 finance companies rotted away. Amaret Sila-on, the chairman of the Financial Sector Restructuring Authority, rolled up his sleeves, determined to muster the best prices from auctioning the Bt800-billion in assets of the defunct companies. His mandate is to complete the auction of these assets, good and bad, by the end of 1998.

Amaret signalled to Vichit of ''the good bank'' and ML Pridiyathorn Devakula of ''the bad bank'', or the Asset Management Corporation, that both should be ready to participate in the auctions in early March 1998. Radanasin would bid only for the good assets of the finance companies, while Asset Management would buy the left-over assets that nobody else wanted. Proceeds from the auctions will be proportionately divided among the creditors of the 56 finance companies.

As it turned out, both the good bank and bad bank were undercapitalised. Since the government was broke, it could allocate only Bt4 billion to the good bank and Bt1 billion to the bad bank. Pridiyathorn needed at least Bt10 billion -- not Bt1 billion -- to leverage into Bt100 billion to buy up the bad assets. Vichit also needed a bundle more, so that he could stand shoulder-to-shoulder against the deep-pocketed foreign funds, which had been coolly circling above the corpses of the 56 finance companies.

Vichit hurriedly put together the office for the good bank, leasing space in a building of the Italian-Thai Group and mounting a hiring spree. Some 8,000 people applied for jobs. Bangkok Bank helped out with information technology.

Vichit promised Prime Minister Chuan Leekpai he would be ready to kick off the good bank by March 1, 1998. But he could not make it on time since the paint was still wet and the computers were not yet connected. He made it on March 15.

But how much could Vichit bid for the good assets when his upstart good bank did not have the cash? It would have been imprudent for the good bank to embark on a price war to mobilise deposits when the banking system was already rattling from a run. Moreover, the Financial Structure Restructuring Authority (FRA) had required that the means of payment had to be in cash or near cash.

But couldn't the good bank pay for the auctioned assets in notes or commercial paper? Vichit lobbied Amaret, FRA president Vicharat Vichit-vadakarn, Finance Minister Tarrin Nimmanahaeminda and banking officials to support this idea. But he could not sell it. By the way, the Financial Institution Development Fund is the largest creditor of the 56 finance companies, having pumped Bt450 billion into their books to keep alive the bodies of their dead brains.

Vichit had argued that if the good bank could competitively participate in the auctions, it at least could act as a buffer to prevent the collapse of general asset prices. For instance, the good bank would bid Bt70 for an asset worth Bt100. If another fund raised the bid to Bt75 or Bt80, the good bank would back off. But if the good bank didn't participate, that same asset could be marked at Bt30 or Bt40 as a starting bid.

Amaret appeared to have his own reasons for taking only cash and not notes. Thailand was badly in need of foreign capital to shore up the baht and boost domestic liquidity. If Amaret could bring in US$10 billion, or Bt400 billion, from selling off the assets of the 56 finance companies, he would accomplish his job.

Besides, there was simply not enough local money around since most was stuck in the bad assets of the financial institutions. About 40 per cent of the total loans of Bt5-Bt6 trillion in the financial system is expected to go sour. So it was impossible for Thai institutional investors or the undercapitalised commercial banks to participate in the auctions.

Suppose that only Bt100-Bt200 billion of the total assets of the 56 finance companies was still good, could the good bank face the criticism that, in the event of transferring the good assets to its books, it was spending government money to bail out the private sector after all of the waste that the FIDF had spent on them? That's the rationale of the International Monetary Fund, which also believed that the practice would amount to transferring the burden from the FIDF to the good bank. Why not let the market decide the fate of the 56 finance companies?

But Vichit understood that if the good assets -- a lot of which were loans to manufacturers -- were not properly handled, Thai enterprises would go under because they were denied the liquidity even though business-wise they were sound. Tarrin also shared this view. In December 1997, before Tarrin held funeral rites for the 56 finance companies, he received negative feedback from the IMF for setting up the good bank, which could have represented another moral hazard.

The IMF told Tarrin: ''You don't need another bank ... You are doing something impossible.'' Tarrin replied: ''Your fear is that our case will be just like the Japanese banks. My darkest fear is that if nobody shows up to bid or if somebody bids so low without competition, say, 25 satang for an asset worth Bt1, what would you do?''

The IMF did not have the answer. Subsequently, it toned down its stance but stipulated in the latest letter of intent that Radanasin could bid only for the highest quality assets of the defunct finance companies.

Without the money or a finely-tuned mandate, Vichit and his good bank stood at the crossroads. If he could not lead the good bank to fulfil the original mandate, why didn't he develop it into a viable commercial bank from scratch. To do so, he would need to attract a foreign partner and capital to jump-start Radanasin.

Another major twist to the events occurred after the government privatised the Bangkok Bank of Commerce, the First Bangkok City Bank, Siam City Bank and the Bangkok Metropolitan Bank. The privatisation made the Radanasin Bank obsolete because the government did not need to have that many banks under its wing.

But the show must go on. Now Vichit, with the help of a foreign partner, is pondering the possibility of acquiring the good assets and branches of the defunct finance companies and the privatised banks, so that Radanasin can start afresh, without the handicap of a labour union or the bad loans on its books. Vichit's is not the most enviable job in the world.