Vatican cleans up scandal-hit bank

Last updated 09:55 10/07/2014
Jean-Baptise de Franssu
CLEAN-UP: New bank president Jean-Baptiste de Franssu is the former head of investment manager Invesco's European business.

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Pope Francis has reshuffled leadership at the Vatican Bank after a year of reorganisation at the scandal-plagued institution in which more than 2000 accounts were blocked and profit dropped 97 per cent.

"With the support of the Holy Father and the Council of Cardinals, we are creating simpler more efficient structures for serving the mission of the Catholic Church," Cardinal-Prefect George Pell said on Tuesday.

Net income at the bank, known as the Institute for Religious Works, or IOR, plummeted to €2.9 million ($1.5 million) from €86.6m in 2012, thanks to writedowns and fluctuations in the value of gold reserves.

Jean-Baptiste de Franssu, the former head of investment manager Invesco's European business, was named president of bank, replacing Ernst von Freyberg who was appointed by Francis's predecessor, Benedict XVI.

The chairman of mergers-and-acquisitions adviser Incipit, Franssu was appointed by the pope earlier this year to the Vatican's council that oversees economic issues.

Francis, 77, has replaced Vatican leadership in his 16 months as pontiff and made transforming the bank one of his top priorities. Franssu will lead a new board and management team at the bank.

"Excellent progress has been made through adherence to international standards," according to a statement released by the Vatican.

"A new anti-money-laundering framework has been put in place and every effort continues to be made to comply with this framework."

Pell said the bank needed new leaders to continue improving transparency and compliance.

"We are now in a position to move the IOR to a second phase of reform under new leadership," he said.

The IOR was set up in 1942 to oversee deposits and execute transactions for clergy and church organisations worldwide. Three decades of scandals, from the Banco Ambrosiano failure in the 1980s to the freezing of €23m by Italian prosecutors in 2010, have tarnished the IOR's image and prompted Francis's push for change.

"Our ambition is to become something of a model in financial management rather than a cause for occasional scandal," Pell said at a news conference.

Franssu joined Invesco in 1990 and served two years through June 2011 as president of the European Fund and Asset Management Association, according to a Vatican biography released in March.

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