New management, new changes coming for reformed Vatican bank
July 08, 2014
The Vatican bank has completed the first phase of a sweeping reform, and now plans to begin the second phase with a completely new management team, the Vatican announced on July 8.
The Institute for Religious Works (IOR) released its financial statements for 2013, showing a sharp drop in profits, largely due to the costs of internal audits and reform measures. The bank showed a net profit of €2.9 million ($3.95 million), a precipitous fall from €86.6 million ($117.89 million) the previous year. The difference was attributed to “extraordinary expenses, adjustments to the value of investment funds managed by third parties, and a drop in the price of gold.” Outgoing President Ernst von Freyberg observed, however, that results for the first half of 2014 have been “highly satisfactory,” signaling a return to higher profits.
Cardinal George Pell, the prefect of the Secretariat for the Economy, offered his thanks to von Freyberg and the other members of the bank’s board. The entire management team will be replaced as the IOR reform continues.
Cardinal Pell will hold a news conference on Wednesday, July 9, to outline plans for the next phase of reform. He is expected to introduce Jean-Baptise de Franssu, a French executive, as the new president of the IOR. The Vatican is also expected to cut back the operations of the IOR, especially in the field of investments, and to make the Vatican bank a smaller institution providing traditional banking services for religious orders, Vatican employees, and a few charitable ventures.
“This is a time of major change in the Holy See, not only for the IOR,” said Cardinal Pell. “With the support of the Holy Father and the Council of Cardinals, we are creating simpler, more efficient structures for those serving the mission of the Catholic Church.”
The reforms of the Vatican bank were begun under Pope Benedict XVI, after Italian banking officials severed institutional ties with the IOR, saying that the institution was vulnerable to money-laundering. For years the IOR had been criticized for lax record-keeping in financial transactions and questionable investing practices. That criticism reached a crescendo in late 2012, and shortly after his election Pope Francis indicated a desire for radical reform of the IOR.
Von Freyberg reported on the first phase of reform in the July 8 report. “As set out in May 2013, we have focused on making the IOR compliant with financial regulation, safer and more transparent, so as to create options for the Holy Father to decide on the future of the Institute,” he said. He revealed that the IOR had inspected all of its accounts, and found that only a small proportion were questionable.
The IOR closed many dormant accounts, von Freyberg reported. (Typically, he said, these were accounts with minimal balances, which had been opened by seminarians in Rome and probably forgotten.) The bank also closed the accounts of about 400 lay people, who qualified for accounts under the IOR’s old standards but would no longer be eligible under the bank’s new rules. Most of these accounts were transferred to Italian commercial banks, he said.
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Further information:
- The IOR Announces Its Second Phase of Reforms (VIS)
- IOR releases financial statements for 2013 and announces Phase II of the Institute’s reform (IOR)
- IOR President Freyberg: Phase One of reform concluded (Vatican Radio)
- Profits plunge at Vatican bank (Financial Times)
- Cardinal George Pell to announce major changes at Vatican Bank (Sydney Morning Herald)
- Vatican bank head ousted amid management shake-up (Deutsche Welle
- Vatican bank profits down by 83.7 mln (ANSA)
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