* Operations start, but details elusive
* Solution is no magic wand - c.bank governor
* VAMC charter capital "miniscule" - World Bank
By Martin Petty and Nguyen Phuong Linh
HANOI, July 26 (Reuters) - Vietnam launched an asset firm to buy up the bad debts of its banks on Friday, a move touted as one of its biggest reforms but seen as merely a band-aid fix for its ailing, credit-starved economy.
The State Bank of Vietnam (SBV) has faced long delays in setting up the Vietnam Asset Management Company (VAMC), or "bad debt bank", to rescue dozens of lenders crippled by what economists say is Asia's highest ratio of non-performing loans (NPLs).
The central bank's plan remains vague and the task is seen as a barometer of Vietnam's commitment to restructuring a once thriving economy fast losing its appeal among foreign investors. It grew 5.03 percent in 2012, its slowest pace in 13 years.
The poor state of the economy has been blamed on banks that lent carelessly, especially to state-owned firms, leading to a credit drought, a real estate market crisis and bankruptcy of at least 120,000 businesses since 2011, government figures show.
At Friday's launch, SBV officials shed little light on how the asset management firm would operate and the central bank governor sought to temper expectations.
"This is not a magic wand to make all bad debt disappear. It's just a tool to help solve the bad debts in the banking system," Nguyen Van Binh said in launching the VAMC, adding its aim was to bring NPLs down to a "manageable" level by 2015.
The concept is similar to Thailand's when it set up an asset management firm in 2003 in the wake of the 1997-98 Asian economic crisis to tackle an NPL ratio of nearly 20 percent.
The VAMC's working capital is 500 billion dong ($23.6 million) - "miniscule" according to the World Bank's July 12 report. It will buy NPLs only on property assets in return for "special bonds", the SBV's deputy governor Dang Thanh Binh told Reuters in April.
The SBV has yet to say what the VAMC will do with the debt it buys. Vietnam's reluctance to increase foreign shareholdings in its banks beyond a 20-30 percent cap has also added to doubts the bad debt situation can be easily solved.
"The government's approach to restructuring its banking sector is considerably different from what is generally considered as good practice," the World Bank said.
The level of success that can be achieved by the VAMC is subjective, since the real ratio of NPLs in the clogged and opaque banking system remains a mystery.
In a report to parliament in May, the government referred to a bad debt ratio of 4.51 percent, but that estimate was derived from data from the banks themselves, some of which could face mandatory supervision or takeover. The SBV estimates NPLs at 6 percent, or $7.8 billion, of outstanding loans of $130 billion.
Independent experts have estimated the ratio could be considerably higher.
Credit ratings agency Fitch said this month that the broad range of NPL estimates came from poor transparency, classification and accounting. The VAMC's structure meant it simply "buys time for banks to write off losses", it said.
News of the VAMC's launch had little impact on Vietnamese banking stocks on Friday, with lenders on the benchmark VN Index unchanged as the broader market closed up 0.4 percent.
Nguyen Ngoc Oanh, a former deputy SBV governor, said more details were needed to assess whether the VAMC could be a success.
"This is a very strange company," Oanh told Reuters. "If it is buying bad debts, then where is the money coming from?"
$1 = 21,225 Vietnam dong Editing by Jacqueline Wong