The Institute for the Works of Religion, or “Vatican bank”, published its 2013 financial statement Tuesday, concluding the first step of an ongoing reform to improve financial transparency at the Vatican.
“As set out in May 2013, we have focused on making the IOR compliant with financial regulation, safer and more transparent, so as to create options for the Holy Father to decide on the future of the Institute,” Ernst von Freyberg, president of the board, said July 8. “Through this work we have lad the ground for a new team to make the IOR a truly outstanding service provider in Catholic finance.”
“Notwithstanding this housekeeping effort, the IOR has delivered a creditable performance for its customers, first and foremost the Holy See itself. In the first half of 2014, we delivered a very positive performance that validates the efforts of all those working at the IOR.”
The issuance of the balance sheet closed ‘phase 1’ of the reform of the “Vatican bank,” the Italian acronym of which is IOR.
The second phase will deal with the integration of the IOR into the new economic-administrative Vatican framework. A new board board and executive team will be appointed to carry forward this phase.
Cardinal George Pell, prefect of the Secretariat for the Economy, thanked von Freyberg and the entire board, as well as director general Rolando Marranci and his staff, for “their great dedication to the cause of delivering a safe and professional financial service to the Church and in bringing about the required improvements for the continuation of the service.”
Under von Freyberg’s presidency, with the help of the external consultants of the Promontory Financial Group, the IOR carried forward the screening of its accounts, as a result of which 3,000 customers' accounts were closed.
The customer categories of the Vatican bank have also been restricted.
“Thanks to this decision, the IOR now focuses only on Catholic institutions, clerics, employees or former employees of the Vatican with salary and pension accounts, as well as embassies and diplomats accredited to the Holy See,” the organization stated.
At the close of 2013, the IOR had some 17,000 customers, of which 12,000 were individuals, and 5,000 were Catholic institutions.
It showed a net profit of some $4 million – down from more than $117 million in 2012.
“The net profit was affected by a number of factors,” the IOR explained: “extraordinary expenses; losses related to property investments in externally managed investments funds committed to in 2012 and nearly 2013; and the fluctuation in the value’s of the IOR gold reserves,” adding that its profit would have been $95 million.
The extraordinary expenses included the cost of Vatican financial reform, which increased operating expenses by more than $11 million.
Despite the low net profit, the IOR contributed $73.5 million to the Holy See's budget.
The Holy See's financial statement for 2013 showed a deficit of $33 million “due principally to negative fluctuations deriving from the valuation of gold.”
It most significant expense are personnel costs, with 2,886 employees.
Meanwhile, the executive administration of Vatican City -- its governorate -- closed 2013 in the black at nearly $45 million in profit, with the assistance of contributions from the IOR.