Prophets & Losses: Challenges continue for the Vatican Bank

The Vatican Bank – or the Institute for the Works of Religion, as it's officially known – has long represented at the heart of the Catholic Church's financial might. As of the end of 2023 – the most recent data we have on the bank's balance sheet – it held assets worth €5.4 billion.
That would include the church's money, but also the deposits of its customers – including priests and bishops. And much of that money would have been invested in the likes of bonds, stocks and shares and securities – all following what the bank calls 'faith consistent investing', which is their attempt to only invest in things that align with the church's social doctrine. That includes environmentally-friendly companies and projects that show a respect for human life.
As of 2023 the bank also held around €37m worth of gold – which was mainly left with the US Federal Reserve for safe keeping. Meanwhile it had around €10.7m worth of medals and precious coins, which were held in the Vatican Bank vaults.
And, from all of this, it made a profit of more than €30.5m in 2023.
It should be said, though, that the bank's assets do not represent the total net worth of the church – far from it.
For example there's a separate entity called the Administration of the Patrimony of the Apostolic See – or APSA for short – which manages most of the Vatican's property interests. Its importance has grown in recent years and, as of 2023, it controlled around 5,000 real estate units, worth around €2.7 billion.
On top of that you also have all of the relics, sculptures, paintings and jewelry that is in Vatican City, and other places around the world. All of this together would add billions more onto the church's balance sheet – beyond what we know about the Vatican Bank's holdings.
But the fact that we know much at all about the bank is a relatively new thing, isn't it?
Yes – the Vatican Bank only started to publish annual reports in 2013. Before then there was very little public information about what the bank was in control of and what it was doing with the assets it had.
And that was very much the aim of Pope Pius XII when he established it in the 1940s – he wanted to add an extra layer of secrecy to the Vatican's finances. That was particularly important in the context of the ongoing war - the Vatican was essentially sitting in the middle of the Allies and Axis powers, and one of the few states able to do business with both.
And from the outset the Vatican Bank wasn't answerable to any regulations from any other country, it didn't publish annual results and it didn't pay any taxes. And while it was only meant to take on members of the church as customers, this relatively unique set up meant it became very attractive to wealthy Italian laymen too – especially those who wanted to keep a low profile on some of their business dealings.
As a result, controversy and suspicion has hung around the bank from its inception.
Tell me about some of the controversies...
There's probably two big ones in its history – one involving Michele Sindona, and the other involving Roberto Calvi and Banco Ambrosiano.
Michele Sindona was an Italian banker who was also good friends with Giovanni Battista Montini – who went on to become Pope Paul VI. As a result, when the Vatican Bank was looking to diversity its assets and investments in the 1960s, it took Sindona on as a financial advisor.
But Sindona wasn't the pencil-pushing banker type – he was also involved with the subversive masonic lodge Propaganda Due, and was working with the likes of the American and Italian Mafias – including the Gambino family in New York – helping them to launder drug money and avoid tax. Eventually, that would often see him transfer Mafia money to Switzerland via the Vatican Bank as a way of evading authorities and regulators.
Sindona also spent a lot of time and money buying up banks of his own to create a network to funnel his money through - but when one of his US companies collapsed in 1974, his whole empire fell apart. That exposed some of the dealings the Vatican Bank was a conduit for – and ended up costing them tens of millions of dollars in the process.
After his empire's collapse Sindona had the lawyer tasked with investigating his business killed – for which he was eventually given a life sentence in 1985. Days later he ingested poison and died.
What about Roberto Calvi?
He was managing director of Banco Ambrosiano - which was a Catholic Italian bank first established in the late 19th Century, which grew to at one stage become the country's second biggest lender.
The Vatican Bank became Banco Ambrosiano's largest shareholder – and the workings of two became quite closely linked for a time. Not least because the then president of the Vatican Bank, Archbishop Paul Marcinkus – who hailed from Chicago - was friends with Roberto Calvi.
His work with the Vatican Bank earned him the nickname 'God's Banker' – but, like Sindona, he was also one of the mafia's bankers, as well as a member of the Propaganda Due masonic lodge. And like Sindona, Calvi often used the Vatican Bank as an intermediary in the large, illegal transactions he was making on behalf of the Mafia.
The Italian central bank eventually became suspicious of what he was doing – and launched an investigation in the late 1970s, which identified billions of lire worth of illegal transactions. And when they dug even deeper, they found massive debts of as much as $1.5 billion – in the bank. Bear in mind this was 1982 – so it's the equivalent of around $5 billion today. And there was correspondence between Calvi and people in the Vatican which showed that senior figures in the church were aware of the kinds of transactions it was involved in.
Following the bank's collapse the Vatican agreed to pay more than $220m to Banco Ambrosiano's creditors in recognition of its "moral involvement" in the collapse – though it never took full responsibility for what went on.
Calvi, meanwhile, fled Italy on a false passport – but just over a week later his body was found hanging under Blackfriar's Bridge in London. He had stones and thousands of dollars of cash in his pockets. It was initially deemed a suicide but an Italian court later ruled it was a murder – the theory being that the mafia had him killed in revenge for the money he had lost them through the collapse of his bank.
The president of the Vatican Bank, Archbishop Marcinkus, meanwhile, who had worked with both Calvi and Sindona, didn't step aside from his role until 1989. Seven years after Banco Ambrosiano's failure. Italian authorities did issue a warrant for his arrest in 1987 but he claimed diplomatic immunity and waited out in Vatican city for a time, until the warrant expired.
He eventually died in 2006.
It's like something out of a movie...
Well you won't be surprised to learn that there have been multiple movies and books made about these events – be they retellings of the events or theories about what else happened with the players involved.
In fact if the story sounds familiar it may be because you've seen Godfather III; it used the dealings of Calvi, Marcinkus and the Vatican Bank as the basis for that film's central plot, though the names are changed.
In his telling, Francis Ford Coppola also included the conspiracy theory that Pope John Paul I was assassinated because he was set to reform the Vatican Bank and expose the corruption within. There have long been questions around his death, which came just 33 days after he was elected pope, but there's never been any compelling evidence that he was murdered.
So did Archbishop Marcinkus stepping aside bring an end to the Vatican Bank's controversies?
Not at all – there have been many since then, albeit at a lower level than what we saw with Sindona and Calvi. As its unique structure of minimal oversight and no taxes continued for many years, it remained an attractive offshore tax haven for the rich for even after the peak of its controversies.
It was investigated for money laundering in 2010 as a result of some suspicious international transactions, for example. Then in 2013, a senior accountant at the bank – Monsignor Nunzio Scarano - was arrested for trying to fly €20m from Switzerland back to Italy. He had been under investigation by Italian authorities for a series of transactions where cheques he claimed to be church donations were recycled through the Vatican Bank.
His arrest also led to the resignation of the bank's director and deputy director a few days later. The directors were found liable for mismanagement at the bank – while the monsigner was eventually given a three years sentence for corruption and defamation.
Then in 2014, Vatican authorities flagged their suspicions around an investment in a property development in London – which ultimately lost the bank €200m. An investigation into that eventually led to a turn of events that really shook the church, which was the arrest of cardinal Giovanni Angelo Becciu, by Vatican authorities, in 2019.
He had been in charge of the management of the Holy See's funds between 2011 and 2018 – but was eventually convicted of embezzlement and fraud in 2023.
Wasn't fixing this a priority for Pope Francis?
Yes – and while all the recent talk of his legacy didn't focus much on this, his attempts to reform the Vatican Bank were a significant part of the work he undertook in his time as pope.
In truth the attempt to reform the bank was started by Pope Benedict – he was the one that set them on the path to publishing annual reports, for example. And to a degree Pope Francis had little choice but to try to tackle problems at the bank – the case hat led to Monsignor Scarano being arrested happened just a few months into his tenure.
But he did make huge efforts to reform it all the same. For example, following a review of its operations, he closed a huge number of dormant accounts the bank held, and forced many of its branches to send their assets back to the Vatican Bank itself in an attempt to simplify and streamline its structure, and make its dealings more transparent.
He also took control away from the likes of cardinals and put it into the hands of people with actual financial expertise – which was a huge issue with the bank from its inception. Archbishop Marcinkus, for example, had absolutely no financial training when was put in charge of the bank in the early 1970s. To try to deal with that he was sent off to a six week crash course in Harvard – before being handed control of billions of dollars worth of assets.
After the corruption revelations in 2013 and 2014, Pope Francis also took away the bank's responsibilities for the church's property assets – giving it instead to APSA. He also brought the bank into the European Union's Single Euro Payments Area – or SEPA – which effectively opened it up to more external oversight and regulation.
As a result of that the reputation of the Vatican Bank has improved dramatically. There are now more international banks willing to work with it than was the case just over a decade ago, and just last month its watchdog said that complaints of suspicious activity involving the bank had fallen by a third in 2024.
At the same time, though, there remains an underlying issue with the church's finances. It had an operating deficit of €83m in 2023, and its pension fund is also said to be facing an ever-growing gap. That means there is still a lot of work to do by the bank - and other parts of the Vatican's financial system – to put the church on a steady footing.
But the continued reform of the bank under Pope Leo is seen to be key to that. Many argue that the fall in donations the church has seen in recent years is linked to the fact that people have little trust that their money will be well-handled and well-spent – and it may take time before their faith is restored.

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