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Vatican Bank Appoints New President; Announces Sweeping Changes As Profits Nosedive
Stephen Little
10 July 2014
The Vatican has hired a former head of Invesco’s European business Jean-Baptiste de Franssu as president of the as Pope Francis continues to restructure the bank in the wake of a series of corruption scandals. The news comes after the bank posted a huge decline in profits and blocked more than 2,000 accounts earlier this week.
The bank reported on Tuesday that its net profit plummeted from €86.6 million ($188 million) in 2012 to €2.9 million in 2013.
De Franssu replaces Ernst von Freyberg, who was appointed by former Pope Benedict in February 2013 following allegations that the Vatican Bank had been used by money launderers.
As part of the reforms to improve transparency, the bank has also created a separately managed pension fund and an asset management unit, it said in a statement. The ordinary section, which acts as the business and accounting office of the Holy See, will also be transferred over to the Secretariat for the Economy, the newly-created body headed by Cardinal George Pell, which has authority over all economic and administrative activities within the Vatican.
The Vatican Bank, also known as the Institute for the Works of Religion, is a privately-held institute located inside Vatican City. Regarded as one of the most secretive banks in the world, it is run by an advisory board that reports directly to a committee of cardinals and the Pope.
As well as de Franssu, five new lay members have been appointed to the board of the Institute for the Works of Religion in total, including Clemens Boersig, Professor Mary Ann Glendon and Sir Michael Hintze.
The Vatican said that this decline was mainly a result of a number of factors, including extraordinary expenses, losses related to proprietary investments in externally managed investment funds in 2012 and early 2013m and the fluctuation in the value of the IOR’s gold reserves.
The Vatican Bank said it has also blocked the accounts of more than 2,000 clients and ended the “customer relationships” of around 3,000 clients as part of its clean up process.
The Vatican has long faced questions over its accounts amid accusations of corruption and money laundering.
Over the past four years, the Vatican City State has continuously strengthened its laws and the regulatory framework under which it operates.
Last August, a new decree by Pope Francis gave the Vatican's internal watchdog increased powers over the Vatican Bank and its financial activities.
These measures tightened safeguards against money laundering, as well as improving internal regulations and establishing a new financial security committee to coordinate the anti-corruption effort.
In June 2013, senior cleric Nunzio Scarano was arrested with two others on suspicion of trying to illegally move €20 million into Italy from Switzerland.