Vatican Bank profit dives after Pope Francis's reforms

The Vatican bank on Tuesday reported a big drop in profits as Pope Francis presses reforms to make the scandal-tainted institution more transparent.

Formerly secretive bank has mandate to operate transparently, modernize

The Vatican Bank has closed 3,000 accounts, some of them dormant, but others that didn't fit the bank's new focus. (Domenico Stinellis/Associated Press)

The Vatican bank on Tuesday reported a big drop in profits as Pope Francis presses reforms to make the scandal-tainted institution more transparent.

The bank, formally called Institute for Religious Works, said its net profit in 2013 fell to 2.9 million euros ($4.2 million Cdn) from 86.6 million euros ($125.6 million) the previous year.

The income statement lists a loss of 14.4 million euros ($21 million) attributed to a `'donation" of securities to a Holy See foundation. It didn't elaborate, but news reports have said a top Vatican cardinal had transferred some 15 million euros to an Italian film company considered close to the Vatican and that the transaction was under investigation.

The bank continues to close accounts that don't meet tighter regulatory standards. The scrutiny reflects the bank's aim to improve compliance with international banking standards, including those to discourage money laundering. So far it has blocked 1,239 individual client and 762 institutional client accounts. Of some 3,000 `'customer relationships" terminated, most were dormant accounts, but others didn't fit the bank's revamped focus.

The bank said it "now focuses only on Catholic institutions, clerics, employees or former employees of the Vatican with salary and pensions accounts" plus embassies and diplomats accredited to the Holy See.

The opaque, secretive way the bank had been run was largely blamed for Vatican financial scandals. Last year a Vatican monsignor with millions on deposit was arrested in an alleged money-smuggling plot. A 2010 money-laundering probe by Rome prosecutors sparked tightened scrutiny at the bank.

Pope Francis had contemplated closing the bank altogether, but decided instead to impose reforms that would make its operations more transparent.

The initial phase of reforms stressed `'zero tolerance for any suspicious activity," said bank president Ernst von Freyberg. The next phase, envisioning more efficient structures, is expected to see a change of command. French financier Jean-Baptiste de Franssu is widely expected to be tapped on Wednesday to head the bank.

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