It was on Monday that the board of the Financial Institutions Development Fund asked for more time to consider the joint Nakornthon/StanChart proposal for it to become a de facto saviour of the Thai commercial bank. It had emerged that Nakornthon would not apply for tier-1 capital support from the Aug 14 Banking Restructuring Programme, but would turn to the FIDF instead for a complete bail-out.

Indeed, as far as the Financial Restructuring Advisory Committee (FRAC), which supervises the banking reform package, is concerned, there have been some regulatory problems in approving Nakornthon's application for tier-1 capital support.

The Bt300-billion banking reform package does not have any room for the authorities to bail out a bank with a negative net worth. Tarrin Nimmanahaeminda, the finance minister, received a full briefing of the NTB proposal last Friday before he left for Washington DC to attend a mid-year meeting of the International Monetary Fund.

Tarrin aired out his message that he would not revise the banking reform package for the sake of NTB alone and he instead asked the authorities to rely on other tools available to help out the bank.

So the FIDF, which had been supposed to stay on the sidelines, had been suggested by the FRAC to participate fully in the bail-out of the NTB. It was a whole new ball game, for the FIDF would be required to inject Bt13.26 billion to fill up the negative net worth of the NTB so that its tier-1 capital stood at 0 per cent. It was a huge amount of money and as the official put it, ''We just cannot write out a blank cheque.''

Bank of Thailand governor and FIDF chairman MR Chatu Mongol Sonakul was not quite sure whether the FIDF would be subject to a bashing later on if somebody questioned the appropriateness of the authorities helping out a bank with a negative net worth.

On Tuesday, Chaktip Nitibhon, the general manager of the FIDF, held an urgent meeting with Vorawee Wanglee, the executive chairman of the bank and representative of StanChart, to ask for additional details on the takeover deal. Reportedly, he raised some points of concern so that the terms would be more acceptable to the FIDF.

Moreover, the FIDF's intervention in a bank of this scale would need full support from Tarrin, who in turn would have to present the case to the Cabinet for eventual approval. For the FIDF would need compensation from the Finance Ministry. There would be some regulatory hurdles to overcome.

For this very reason, a plan by the NTB to hold a board meeting followed by a shareholders' meeting today to approve a Bt20.27-billion recapitalisation plan had to be postponed until it received a clear mandate from the authorities. Under the plan, the Bt2-billion capital of the bank would be written down before the FIDF injects Bt13.27 billion to bring the bank's tier-1 capital to zero per cent.

StanChart would enter the scene at this point by injecting Bt6.2 billion to maintain a 68 per cent stake, while the Wanglee family and the minority shareholders would contribute Bt800 million to keep an 11 per cent stake.

The FIDF would reduce its 100 per cent stake in NTB mustered after its intervention to 20 per cent by selling if off to StanChart immediately to avoid turning the Thai bank into a state enterprise and subjecting it to cumbersome regulatory requirements. In return, the FIDF will get other bonus options given by StanChart so that it can make gains during the uptrend over the next five years.

However, in the eyes of the authorities, they would like to conclude this deal as quickly as possible. StanChart's recent acquisition of Bank Bali of Indonesia has significantly enhanced the reputation of the crisis-hit country in the international community. Sentiment in Thailand should improve if this Nakornthon-StanChart deal clears all the hurdles.

For the Wanglee family, there is nothing else to lose after the bank's conditions slipped into negative net worth. By asking for the authorities' intervention and striking a partnership deal with StanChart, the family can hope to salvage some of its remaining stake.

However, the management of the NTB will have to win the shareholders' support by at least 75 per cent for the recapitalisation plan. Since the bank will be writing down its shares from Bt10 to one satang, there will be some difficult explanations to make on June 2 at the shareholders' meeting.