The faltering Bank of New England Corp. yesterday disclosed that its financial health is continuing to deteriorate, increasing the likelihood that the government will soon have to take over the Boston banking company, which has $23 billion in assets.

The company said it lost so much money in the final quarter of 1990 -- as much as $450 million -- that its next financial statement will show that it is insolvent, meaning it would not have enough money to pay all its debts if it were called upon to do so.

The fact that the bank holding company is insolvent does not automatically mean all the banks it owns are going to fail, federal banking regulators stressed yesterday. But if the year-end review of the banks' books reveals that they are in as bad a shape as their parent company, regulators said the government will be forced to take them over in what would be among the biggest and most costly bank failures ever.

The holding company owns Boston-based Bank of New England, Maine National Bank and Connecticut Bank and Trust Co. At the end of last year, it sold Bank of New England Old Colony in Rhode Island.

The company said that because of the continuing deterioration of the regional real estate market and the New England economy it will have to report a loss for the quarter of as much as $450 million, bringing total losses for the past two years to about $1.7 billion. A $450 million loss would wipe out the company's remaining $255 million of equity, leaving it with debts that exceed its assets by about $195 million.

The company has been trying to save itself by raising new capital from private investors, but the prospects for success were dimmed by disclosure of the new losses.

The loss announced is "in the range of our worst-case scenario," said Wilbur Ross of Rothschild Inc., the Wall Street investment banking company that is leading the effort to rebuild the company's finances. Ross said investors are now studying whether the refinancing plan can still succeed in light of the latest disclosure.

Yesterday's announcement led some depositors to withdraw their money, standing in long lines outside of some Bank of New England branches, the Associated Press reported. Television crews staked out some branches, heightening public concerns about the health of financial institutions in the Northeast.

Only a week ago, regulators shut down Capital Bank, a $500 million Boston institution. Then on New Year's Day, neighboring Rhode Island was rocked by the failure of a private deposit insurance fund that forced the closing of 45 credit unions and banks.

Adding to the anxiety was the indictment yesterday of a former Bank of New England vice president on 49 counts of fraud and embezzlement involving kickbacks from borrowers.

In Washington, regulators adopted a low-key attitude, stressing that accounts of up to $100,000 are protected by federal deposit insurance and that no government takeover of the bank was imminent.

Any decision on whether to intervene would be made by the Office of the Comptroller of the Currency, the agency responsible for regulating national banks. OCC officials are working closely with the Federal Reserve Board, which regulates bank holding companies, and the Federal Deposit Insurance Corp., which is responsible for banks that fail.

The government has other options besides simply letting the FDIC seize the banks and pay off depositors, said OCC spokesman Ellen Stockdale. One is to create what regulators call a "bridge bank" owned by the government that would take over the operation and run it until it could be sold. Another is for the government to take the banks away from the holding company and pump cash into them to keep them alive.

Regulators have been monitoring the declining health of Bank of New England for more than a year. Under government pressure, the company's assets have shrunk from $32 billion to $23 billion, a move that will reduce the cost to the government if the bank does fail.

The company has stopped paying dividends to shareholders, drastically reduced its lending and laid off thousands of employees as a cost-cutting measure.

The OCC also has ordered the holding company to raise additional capital, but so far it has been unable to do so. A preliminary plan for raising about $400 million was worked out last month and officials involved in that effort said yesterday they are trying to determine whether it is still viable in light of the latest losses.