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Vatican bank to be scaled back, restructured: sources

By Philip Pullella
An exterior view of the tower of the Institute for Works of Religion (IOR) in Vatican City in 2011. REUTERS/Stringer

By Philip Pullella

VATICAN CITY (Reuters) - The Vatican bank will soon hive off its investment activities and transform itself into an institution dedicated mostly to payment services for the Roman Catholic Church, Vatican sources said on Monday.

The details of the down-sizing will be announced on Wednesday by Australian Cardinal George Pell, who heads the Secretariat of the Economy set up earlier this year to oversee Vatican finances and stem scandals that have embarrassed the Church for decades.

The sources said French businessman Jean-Baptise de Franssu is expected to be named as the new head of the bank, formally known as the Institute for Works of Religion (IOR). He will succeed German Ernst von Freyberg, who is leaving after instituting major reforms.

Under the expected changes, the IOR will no longer have asset management functions. Its remit will be restricted to providing payment services and financial advice for religious orders, charities and Vatican employees.

The Holy See's assets are expected to be managed by a newly created department, the sources added. The radical overhaul of the bank will be announced a day after the IOR publishes its performance numbers for 2013 on Tuesday.

The new statues of the bank are expected to make the chairman's job a full-time residential position.

Freyberg, who was appointed to the bank in 2013 in one of the last decisions made by former Pope Benedict before he resigned, had been dividing his time between Germany and Rome.


Under Freyberg's leadership, the IOR closed hundreds of accounts, instituted strict anti-money laundering regulations and launched several investigations into suspicious activities.

The changes in the IOR were finalised by Pell and the pope's other economic advisors last Saturday.

Francis, who was elected in March, 2013, had considered closing the bank but he decided to keep it operative but with a program of continuing reforms.

Francis also appointed a Council for the Economy, a 15-member group of prelates and lay people from around the world that will set economic policy for the Holy See and for the Secretariat for the Economy. De Franssu has been appointed to that council.

The IOR has been at the center of scandals in recent years.

Monsignor Nunzio Scarano, who worked as a senior accountant in another Vatican department for 22 years with close ties to the IOR, is now on trial accused of plotting to smuggle millions of dollars into Italy from Switzerland to help rich friends avoid taxes.

Scarano has also been indicted on charges of laundering millions of euros through the IOR. He says the money in his accounts at the IOR were donations, which Italian magistrates dispute. He was arrested in June 2013.

(Reporting By Philip Pullella; Editing by Tom Heneghan)