Vatican bank publishes first annual report in bid for clarity
It comes as Italian prosecutors investigate alleged money-laundering there, a Vatican monsignor remains in detention and the pope himself probes the problems that have brought such scandal to the institution.
Earnings at the bank, known as the Institute for Religious Works, rose more than fourfold in 2012 as net trading income rebounded from a loss in 2011, the report said.
The institute said it earned €86.6m as the value of the securities it held and sold rose to €51.1m from a loss of €38.2m in 2011.
More than €50m of that profit was given to the pope for his charitable works.
The picture may not be so rosy for 2013, with rising interest rates cutting into profits and millions of euro earmarked for the institute’s ongoing transparency process, which has involved hiring outside legal, financial, and communications personnel to revamp its procedures, review its client base, and remake its image.
“Overall, we expect 2013 to be marked by the extraordinary expenses for the ongoing reform and remediation process, and the effects of rising interest rates,” bank president Ernst von Freyberg said in a statement.
He said the publication of the report meets the bank’s commitment to providing transparency about its activities.
Aside from the earnings, the 100-page report provides some fascinating reading about the secretive institution: In 2012 it had €41.3m in gold, metals and precious coins, owned a property company, and was bequeathed two investment properties worth €1.9m. It also made €25.8m in loans in 2012.
The Vatican has long insisted that the institute is not a bank but a unique financial institution aimed at managing assets for religious or charitable works — a distinction that presumably helped it avoid typical banking regulations.
Yet in the past year, the institute has slowly revealed itself to work very much like a bank, providing asset management services to its clients, earning €12.2m in fees and commissionsfor such services in2012 and makingloans.
The Vatican is about to enter a second round of international scrutiny by the Council of Europe’s Moneyval committee, which helps countries comply with international norms to fight money laundering and terrorist financing.
The Vatican passed Moneyval’s inaugural inspection last year, but evaluators gave the institute and the Vatican’s financial oversight agency poor or failing grades for insufficient controls to ensure that its clients and assets were clean.
The report was released as Rome prosecutors continue to investigate a Vatican accountant, Monsignor Nunzio Scarano, who was arrested in an alleged plot to bring €20m into Italy from Switzerland without declaring it at customs.
His lawyer has insisted the money was clean and that he was only trying to help out friends.
