Skip to content

‘Vatican bank’ reports profits of progress

The Institute for Works of Religion, the Vatican City bank, has published its annual report for the 2022 financial year.

The report, which follows an independent audit of the insulation, showed increased profits and financial stability for the bank, even while its customer base shrank.

IOR president Jean-Baptiste de Franssu

In his statement opening the report, IOR president Jean-Baptiste de Franssu noted that he and most of the bank’s current board of superintendence have been working for nearly a decade to improve its financial performance while moving to shore up oversight and regulatory compliance.


“Many hurdles were overcome, and uncertainties addressed,” de Franssu said. “The appropriate culture and level of competence, which had lacked so often in the past, were introduced and developed.”

“Ethics has now become a constant focus, be it in the way assets are managed or the Institute is run,” he said, “and the board can look back and be proud of having been able to deliver on the Holy Father’s initial ambition to make the Institute a reliable and ethical partner for the work of religion.”

The continued focus on ethics and regulatory compliance appear to have proven sound business moves for the IOR. 

With 5.2 billion euros worth of assets under management, the IOR reported a profit of more than 29 million euros for 2022, up 63% from 18 million euros the previous year. 

In line with its religious mission, the bank said, part of the profits would be distributed for charitable works, including 3 million euros for Pope Francis’ personal charitable priorities, 2 million for projects to be determined by the banks board of cardinal supervisors, and 200,000 euros for charity to be distributed by the IOR’s prelate (senior clerical officer).

The bank also reported a remarkably high level of financial stability, posting a TIER 1 capital ratio of 46.14%, up from 38% the previous year. 

The ratio is an international standard measuring liquidity and institutional risk exposure for financial institutions. The minimum international banking requirement is a ratio of 6%. For comparison, in April 2023, Bank of America posted a TIER 1 ratio of 13%.

De Franssu also boasted that the bank had introduced last year a performance-related remuneration scheme for IOR staff alongside expanded investment management services for clients.

The bumper year for profit and performance came as the bank also shed clients — reporting a drop in the number of customers over the previous year, from 14,519 to 12,759.

According to the report, part of the drop in the bank’s client base was due to account closures by “seminarians or clerics who returned to their [home] countries.” That their business was not replaced by a new incoming tranche of Vatican clerical residents could be a knock-on effect of the ongoing hiring freeze across curial departments.

The IOR also highlighted that many of the other lost clients were the result of “accounts closed by the Institute, as a result of increasingly frequent and granular periodic checks, for different reasons such as: loss of requirements [for eligibility to bank with the IOR]; non-compliance with contractual rules applicable to the accounts; and non-use [of accounts] for extended periods of time.”

For nearly a decade, the IOR has been seeking to close accounts of individual and institutions without a clear link to the Holy See or the work of the Church and, because Vatican City state does not have personal taxation, IOR accounts have long been a target for money launderers or individuals hoping to use it as a tax haven.

The IOR, the only commercial financial institution in the Vatican, operates as a for profit institution providing banking and asset management services to private clients, but, as its name suggests, religious orders form the majority of its customer base (owning nearly half of its assets on deposit). 

The IOR also provides banking services to bishops conferences, dioceses and parishes in parts of the world without access to reliable local banking services. It also offers accounts to Vatican departments, institutions, and employees, as well as Vatican City residents.

It has been at the center of several financial scandals in its history, most notably the Banco Ambrosiano scandal of the 1980s. Since 2014, the IOR has been the subject of several financial reforming efforts, with hundreds of accounts closed and charges filed against former officials at the bank.

In 2021, the former president of the IOR became the first person to be handed a jail sentence by a Vatican City court for financial crimes, after defrauding the bank of millions by using his position to sell parts of the IOR’s property portfolio to himself and co-conspirators.

De Franssu hailed the recovery of more than 17 million euros “which had been stolen from the Institute before 2014” as “amongst the important achievements of 2022.” 

“Further successes are expected in 2023 in the fight against past abuses,” the president said.

After decades of scandal, the IOR is now widely regarded as the most credible financial institution in the Vatican. Its leaders have also emerged as key figures in the wider effort to clean up the curial finances.

Subscribe now

Pope Francis has increasingly signaled his confidence in the IOR and its leadership, moving to grant it increased operational independence while making it a focus of his wider reforms of Vatican financial affairs.

In March, the pope moved to confirm new statues for the bank which had been in place ad experimentum since 2019.

Last year, just months after promulgating Praedicate Evangelium, his long-anticipated constitution for the Roman curia, Pope Francis issued a rescript reversing one of its key financial reforms.

Praedicate Evangelium had cemented the pope’s landmark reform of ordering all Vatican departments and affiliated institutions to move all of their assets and investments to APSA, “the entity responsible for the administration and management of the real estate and movable assets of the Holy See.” 

But in 2022, Francis changed the law and ordered all Vatican accounts, funds, and investments over to the IOR, who would manage them instead of APSA, which was left only with the Holy See’s real estate portfolio.

Now, according to Francis’ law, “the activity of asset manager and depositary of the movable assets of the Holy See and of the institutions connected with the Holy See is the exclusive competence of the Institute for Works of Religion.” 

That change came only in August of last year and, according to the IOR annual report, it is still in the process of being implemented.

The IOR’s efforts to respond to the August rescript, and what it means for the IOR’s operations, is a “particularly important” priority for the bank, de Franssu said in his message, while noting that “not all practical aspects are yet confirmed” for the bank’s transition into becoming the sole deposit bank and asset manager for all the sovereign institutions of the Holy See. 

“Ongoing dialogue is taking place with all parties involved to adequately put in place those changes,” he said.

The IOR is the only Vatican financial institution currently subject to oversight by ASIF, the Vatican’s internal financial watchdog, and Moneyval, the Council of Europe’s anti-money laundering agency. The European group last issued a report on the financial health of the Vatican and the IOR in June of 2021, following a lengthy onsite inspection the previous October.

That report concluded that, after years of internal policy reform and a change in leadership, the risk of money laundering at the IOR was “medium-low.” But the same report also warned about the general culture among curial officials, which it concluded carried a real risk of “fraud, misappropriation, giving and receiving bribes, and abuse of office.”

In 2019, de Franssu and the bank’s director, Gianfranco Mammì, were pressured by senior leaders at the Secretariat of State to approve a loan request of 150 million euros to refinance a mortgage on a London property.

The men rejected the loan application, and reported it as suspicious to ASIF, who declined to investigate. De Franssu and Mammì then raised their concerns with Vatican prosecutors and Pope Francis directly, triggering a criminal investigation in the Vatican, leading to the still-ongoing trial of ten former Vatican officials and advisors.

Among those on trial are ASIF’s former president, René Brülhart and his former deputy, Tomasso Di Ruzza; both are charged with abuse of office.

De Franssu, has told the Vatican court that he said he and the members of the IOR’s lay board of superintendence had their competence called into question, and were accused of being “unreasonable” for opposing the London deal loan request.

De Franssu also told the judges that the ASIF leaders told him he was being “obstinate” and said he would be “protected” if he authorized the deal.

The court previously heard how Archbishop Edgar Peña Parra, sostituto at the Secretariat of State, was so “outraged” by the IOR’s rejection of the loan application that he authorized a retaliatory investigation into the bank’s director general, Gianfranco Mammì, in response.

That trial remains ongoing.

Subscribe now

Comments 4