Vatican bank displays financial decline, moral gains after papal reforms

Despite diminished profits, the Vatican bank appears ready to turn a new page in the wake of years of financial scandals.

Faithful gather to attend the Catholic Easter Sunday Mass led by Pope Francis in St. Peter's Square at the Vatican, April 17, 2022. For many Christians, the weekend marked the first time in three years that they gathered in person to celebrate Easter Sunday. (AP Photo/Alessandra Tarantino)

VATICAN CITY (RNS) — Pope Francis has been clear about his vision for Catholicism as a “poor church for the poor” and the 2021 annual report of the Vatican bank shows that the pope’s wish is closer than ever to becoming a reality.

In the report published on Tuesday (June 7), the bank, officially the Institute for Religious Works, announced that it made a net profit of 18.1 million euros (about $19.3 million) last year, a significant decrease from the 36.4 million euros it netted in 2020, but which Vatican officials defended as an able effort in difficult times.

“This is certainly an important result considering the low yields on financial markets,” said Cardinal Santos Abril y Castelló, president of the Commission of Cardinals, which oversees the bank, in a statement accompanying the report.

“The wise and prudent choices made by management continue to pay off,” he added.

The report said that two years of the COVID-19 pandemic, plus the war in Ukraine, put a strain on the church’s finances and that the repercussions will continue to harm its prospects.

Perhaps in light of the financial corruption trial going on at the Vatican tribunal, which has shown how church funds found their way into movie production and luxury real estate deals, the commission also underlined its commitment to “Catholic consistent investment criteria in line with the social doctrine of the church.” But curtailing high-risk investments and restricting its managers to ethical investing likely impacted the IOR’s bottom line, the report said.

The bank also highlighted its successes, particularly the 2021 report by Moneyval, the European anti-money-laundering entity, which gave the institution a good rating.

The bank, which provides services to 14,519 individuals and entities located in 112 countries, closed roughly 3% of its accounts in 2021. “The opening and/or maintaining of accounts at the IOR is destined to become more and more selective in the following years in order to protect the Institute’s service mission,” the report stated.

The costs of the institution grew in 2021 due to expenditures for providing digital services for clients and hiring new managers and employees. Total assets declined slightly because it acquired a pension plan for its employees in compliance with legal and accounting requirements.

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The Institute for Religious Works was created in 1942 as a means to safely distribute funds to Catholic missions and dioceses during the Second World War. But since its founding, the bank has endured one wave of financial scandals after the next, the most recent resulting in the abrupt resignation of its president, Ettore Gotti Tedeschi, after the Vatileaks scandals of 2012.

A Vatican trial found a former president of the bank, Angelo Caloia, guilty of money laundering, embezzlement and misappropriation of funds in January 2021. In 2022, former IOR employees were also brought to trial and found guilty of corruption.

But Francis made reform of the Vatican’s finances one of his first priorities when he became pope in 2013, and after nearly a decade of scrutiny, the bank appears to be ready to turn a new page. In the current trial, involving 10 individuals charged with crimes ranging from money laundering to fraud, the IOR is only tangentially involved, and even flagged the purchase of a London apartment complex — the transaction at the heart of the charges — as suspicious, launching an investigation into the Secretariat of State’s financial management.

Monsignor Battista Mario Salvatore Ricca, the prelate of the IOR, said in a statement published with the report that today the bank “basically does what it is supposed to do and nothing else.”

“So do not worry about achieving extraordinary results,” Ricca wrote. “Do what you can and let Providence do the rest, otherwise in the pursuit of excess, the words of St. James — ‘Will the rich person fade away in the midst of his pursuits’ — may come true for us as for everyone else.”

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