WITH hindsight, Pin Chakkaphak could have become one of Thailand's richest financiers and most successful takeover king if he had stripped Finance One Plc's of its assets in its peak year of 1994, or if he had read the market accurately.

At that time, the almost invincible Fin-One stock hit Bt214, bringing the company's market capitalisation to around Bt88.5 billion. Pin and his family's stake in the leveraged investment company amounted to about 5 per cent, equivalent to Bt4.42 billion. Today, with the Fin-One stock down to Bt23.75, Pin's percentage would be worth around Bt500 million if he had held on to it.

''Pin did not get out at that time because he misread the market," said a keen observer of the Thai financial system. ''Apparently, he is not a financial genius."

Finance One's stock prices moved in almost perfect correlation with the Stock Exchange of Thailand index during the nine years of its roller-coaster ride as a listed firm. This means that Fin-One was purely a capital market animal, dependent on liquidity and market sentiments. With the market in an upward trend, Fin-One would continue to leverage its finance business by creating more debts and enjoying more capital gains.

Pin and his Fin-One colleagues were products of the bull market, which bred a sense of overconfidence. The Bank of Thailand was also to blame, projecting that the over-invested Thai economy would sustain its mighty growth rate of between 7 and 8 per cent until the year 2000. Like other financiers, bankers, real estate developers and fly-by-night businessmen, Pin believed in the invincibility of the Thai economy.

He is paying dearly for misreading the bear market which has continued for more than three years. With the SET index plunging from its peak of 1700 to 700, Fin-One too has to face reality.

From the regulators' point of view, Pin is merely a stock market speculator who happened to lose his fortune temporarily in the market downturn. Fin-One's damage is similar to that of other finance companies, whose primary business is the money game. The firm has fallen to its knees due to a liquidity crisis. In the financial market turmoil, Fin-One happened to be the fattest target of a deposit run.

Both Pin and Krirk-kiat Jalichandra, former president of the Bangkok Bank of Commerce, were in the same money-game business. Leveraged investments were the name of the game. Insofar as the capital market keeps rising, leveraged investment is the fastest way to make money. If the market heads the other way it is also the fastest way to disaster.

However, there is a big difference between Pin and Krirk-kiat. Pin was not defrauding Finance One, he was merely mismanaging the business.

Krirk-kiat was alleged to have plundered BBC until it collapsed. Krirk-kiat did not intend to destroy BBC from the start, but his money game plunged the bank deeper and deeper into the red until it racked up Bt70-Bt80 billion in bad debts. Along the way, Krirk-kiat could not resist considering the BBC his personal ATM machine.

Regulators have shown their willingness to bail Pin and his Fin-One empire out. In the memorandum of understanding on the merger between Fin-One and Thai Danu Bank, the Bank of Thailand acted as a broker, promising to continue to provide liquidity support to Fin-One before and after the merger. The BOT has already guaranteed the promissory-notes of Fin-One and all the other finance companies in order to calm down the investors.

The BOT will also discuss with the Revenue Department any tax breaks that should be given to the Fin-One/Thai Danu merger. It was hoped that Fin-One and Thai Danu would accelerate the merger process by completing the due diligence within 30 days. Finance Minister Amnuay Viravan and Bank of Thailand Governor Rerngchai Marakanond almost literally forced Pin and Pornsanong Tuchinda, the president of Thai Danu, to signed the MOU for the merger last Friday.

The regulators have demonstrated their strong determination to let the Fin-One/Thai Danu merger serve as a model for other mergers and acquisitions in the finance sector. The BOT would like to reduce the 91 finance companies by at least half through consolidation to prevent a repeat of the crisis.

Merged finance companies will be given incentives to become more competitive by acquiring licences to provide checking account services and foreign exchange businesses, which would significantly improve their liquidity management. Without soundness in the financial system, there is no way the country can emerge from its macro-economic malaise.

Amnuay realises that he has to act quickly because nobody is certain about the stability of the coalition government. His most important task now is to instil confidence in the Thai economy. With the crisis in the financial system, he has no choice but to perform surgery. Therefore, the Fin-One/Thai Danu merger only marks the start of a painful consolidation process in the finance sector.