Pope says troubled Vatican Bank will remain open

Pontiff says bank will "continue to serve with prudence and provide specialised financial services to the Catholic Church worldwide"

Pope Francis has given his backing to the Vatican’s scandal-plagued bank, ending speculation that he might shut it down as part of his drive to clean up the Vatican’s murky finances.

The decision, announced yesterday, follows a breakneck transparency drive at the bank, known by its Italian initials IOR (Istituto per le Opere di Religione), which has been accused in the past of offering banking services to mob bosses and tax dodgers. Consultants have been brought in to comb through customer lists and dozens of accounts have been shut down in recent months after years in which lay customers with tenuous connections to the Vatican were allowed to open accounts alongside priests and cardinals.

“The IOR will continue to serve with prudence and provide specialized financial services to the Catholic Church worldwide,” the Vatican said in a statement. The announcement ends months of uncertainty over the bank’s future after Pope Francis said last July: “I don’t know what will become of the bank. Some say it is better that is a bank, others that it should be a charitable fund and others say close it.”

Francis has also remarked that “St Peter did not have a bank account”. Monday’s statement showed Francis was satisfied by the pace of reform at the bank, where officials now claim they will have scrutinised all 18,900 accounts by the summer. Francis, the statement said, had reaffirmed “the importance of the IOR’s mission for the good of the Catholic Church, the Holy See and the Vatican City State”. Improvements in compliance started in 2012 were “critical” for the bank’s future, it added. Opened in 1942 to offer banking to priests, nuns, religious orders and Vatican staff, the IOR was linked to the collapse of the Italian Banco Ambrosiano, in which it held a stake. Investigators believe the death of Roberto Calvi, the bank’s chairman, in 1982, who was found hanging under London’s Blackfriar’s Bridge, was linked to mafia money laundering.

Last month, Italian magistrates said two former senior managers at the bank, Paolo Cipriani and Massimo Tulli, will stand trial for violating money laundering regulations. Cipriani and Tulli were close to prelate Nunzio Scarano, a Vatican functionary now on trial for trying to smuggle 20 milion euros into Italy in a tax dodging scam. Francis confirmed the IOR’s mandate after he was given a report on the bank in February by the council of eight cardinals he has appointed to help him ring the changes at the Vatican.

Without giving details, the statement suggested further reforms at the bank would follow, but confirmed that operations would continue to be monitored by a supervisory panel known as the Financial Information Authority, launched in 2011 by Francis’ predecessor Pope Benedict. Max Hohenberg, a spokesman for the bank, said the announcement “represents a powerful endorsement of our very mission and the hard work accomplished over the past 12 months”. A source involved in reforming the bank added, “This shows we are on the right track.”