Vatican Bank Releases Historic First Annual Financial Report

Vatican Bank Publishes First Annual Report

The Vatican's bank has published its first annual report in its 125-year history as part of an attempt to become more financially transparent. The Institute for Religious Works (IOR) has long been dogged by accusations of corruption.

The report shows 2012 was a successful year for the bank, with net profits more than quadrupling to 86.6 million euros. The bank stated this jump was mainly due to favourable trading results and an increase in the value of bonds it held.

Financial Highlights

• Net Profit: 86.6 million euros.
• Church Contribution: 54.7 million euros given to the Pope for global missions.
• Total Assets: 4.98 billion euros.
• Equity Funds: 769 million euros.

The assets were primarily held in bonds and money market accounts. However, the report also reveals the IOR held 41.3 million euros in gold, coins, and other precious metals, a stake in an Italian real estate company, and two inheritance properties worth approximately two million euros in 2012.

Fighting Corruption and Reform

In the report, President Ernst von Freyberg stated that the IOR needed to be a well-respected member of the global financial community. "The annual report seeks to contribute to the transparency which the Catholic Church, our customers, our correspondent banks, our authorities, and the public rightfully expect," he said. Mr. von Freyberg added that the bank has been engaged in a process of far-reaching reform to improve its organisation, compliance, and transparency.

The IOR has previously been accused of money laundering and a lack of due diligence in allowing non-religious businessmen to hold accounts in what amounts to an international offshore tax haven.

Regulatory Oversight

In August, Pope Francis stepped up the fight against corruption at the Vatican by strengthening supervision of financial transactions at the bank. He issued a decree designed to combat money laundering and prevent the financing of terrorism. The Pope also recently established a commission to investigate the bank and report back to him personally.

In July, the Vatican froze the account of a senior cleric, Monsignor Nunzio Scarano, suspected of involvement in money laundering. He and two others were arrested by Italian police in June on suspicion of trying to move 20 million euros illegally. At the time, the bank stated it would have "zero tolerance for any activity, whether conducted by laity or clergy, that is illegal or outside the Statutes of the Institute."

Customer Base

As of the end of 2012, the IOR had approximately 18,900 customers, most of which were institutional investors. This was a decrease from 21,000 the previous year, which the bank attributed mostly to the closure of inactive accounts. The bank handles the payroll for some 5,000 Vatican employees and funds for the central administration of the Catholic Church. It also holds the accounts of cardinals, bishops, priests, nuns, and religious orders around the world.