The Vatican bank has blocked the accounts of more than 2,000 clients and ended some 3,000 "customer relationships" as part of a clean-up process that nearly wiped out its profit, its 2013 financial statement showed yesterday.

A senior Catholic cleric with connections to the Vatican bank was arrested for plotting to help rich friends smuggle tens of millions of euro in cash into Italy from Switzerland, in the latest blow to the Vatican’s image.

Paolo Gabriele, the papal butler held on suspicion of leaking documents alleging corruption in the Vatican, was driven by his love for Pope Benedict XVI and a desire to help clean up the Catholic Church, his lawyer said.

The Vatican said the seizure by police of €23m from a Vatican bank account and the investigation of two top bank officials was due to a simple misunderstanding that should be clarified quickly.