Fitch Ratings said in a statement that the junta's appointment of former Army chief General Surayud Chulanont was a "positive first step" for Thailand's political stability. On Sunday, the generals who ousted former prime minister Thaksin Shinawatra named Surayud as prime minister until elections promised for October 2007.

"If the political crisis is resolved quickly and confidence restored after the past several months of political turmoil, then the implications for the Thai economy and for the banks could even be positive," said Vincent Milton, managing director at Fitch Ratings Thailand.

"However, if the crisis is prolonged, the negative effects on the economy, and ultimately on the banks, could be significant," he said.

Fitch had placed Thailand's sovereign ratings and the ratings of seven major banks on review for possible downgrade following the bloodless September 19 coup.

"Based on the assessment of trends in recently released full-year accounts for the first half of 2006, the larger Thai banks, particularly Siam Commercial Bank and Kasikornbank, continue to perform strongly, although performance could weaken in the second half due to low loan growth," Milton said.