Vatican Bank declares large profit in annual report
VATICAN CITY-- The Vatican Bank has reported a more than 100 per cent increase in profits in their latest annual report thanks to what they describe as a “prudent approach” to managing investments.
In the 136 page annual report, the Institute for the Works of Religion (IOR) report that net profits for 2016 were €36 million up from €16.1 million the year before, with these gains then being distributed in aid of the Holy See’s mission.
The latest statement, released Monday, also reveals a €4 million decrease in expenses to €19.1 million which was achieved by a “rationalisation” of outside contractors.
These results will be seen as a boost for Pope Francis’ Vatican financial reforms, which he has entrusted to Australian Cardinal George Pell. Soon after taking over as Prefect of the Secretariat of the Economy, Cardinal Pell announced a new management of the bank, including appointing billionaire hedge fund guru Michael Hintze to its board.
Over the years the IOR had been mired in scandal with accusations that it was being used for money laundering and failing to abide by international financial standards.
But since Francis’ election, thousands of accounts have been closed and strict new rules introduced in regards to who can hold an account with the bank. The IOR effectively acts as a deposit account managing €5.7 billion worth of assets, although does not issue loans.
According to the 2016 report, it had 14,960 clients which - under the new rules - must be either priests, religious, Vatican employees (including those retired), church institutions, or some diplomats who are accredited to the Holy See.
“Most of the IOR’s clients are active in missions or perform charitable works at institutions such as schools, hospitals or refugee camps,” the report says.
The Vatican bank is seen as a prudent place for religious working in war-torn parts of the world where there are no banking facilities - nuns running a hospital in South Sudan are often given as an example.
In the 1970s and 80s, however, the bank has been embroiled in the collapse of two Italian banks, including 'Banco Ambrosiano', whose chairman, Roberto Calvi, was later found hanging from Blackfriars bridge.
Crisis then hit in January 2013 when Italy’s central bank blocked all electronic payments through cash machines and credit cards in Vatican City State, caused partly by the IOR failing to keep up to speed with new anti-money laundering rules. These laws were brought in following 9/11 in order to prevent the financing of terrorism.
All this meant some cardinals wanted Pope Francis to close down the bank, arguing that St Peter did not have a bank account. This was a view shared by Francis but he later agreed to keep the IOR open provided it was reformed.
(This article first appeared on The Tablet website)