The latest instalment brings the total amount returned by the fund to its lenders to $2.6 billion, nearly 75 percent of the original investment.

The hedge fund, which used leverage to make large bets in bonds, derivatives and stocks, has cut its portfolio risk by 90 percent in the past year, a spokesman for the banks said.

"We anticipate the marketplace can easily absorb the remaining 10 percent of the risk in the portfolio before the end of the first quarter of 2000," the spokesman said.

Based in Greenwich, Connecticut, and run by former Salomon Brothers bond trading chief John Meriwether, LTCM ran into trouble in late September of last year when many of its leveraged bets in bond and derivatives markets went sour.

Russia's default on domestic debt last Augustthrew bond markets into turmoil, which translated into losses for LTCM, which had investments estimated at $100 billion on a capital base of $5 billion.

A group of 14 banks provided the fund much-needed capital on September 24 last year after being prompted by the Federal Reserve Bank of New York. Bank regulators feared a collapse of LTCM could unravel already fragile bond markets.

In return for the capital infusion, banks were allowed to work directly with the fund's managers in disposing of the fund's investments.

LTCM needs to return to the banks about 90 percent of the borrowed capital before any of the fund's partners can raise new capital.

Meriwether has discussed starting a new fund with several potential investors, according to money managers.