Vatican bank profits collapse after clean-up

Pope Francis at the weekly papal audience in Rome, January 2014 (Rex Features)

The Vatican's secretive bank has reported a huge decline in profits and blocked thousands of accounts following an annus horribilis for the institution, marred by allegations of corruption and money laundering.

The bank, formally called Institute for Religious Works (IOR), said its net profit in 2013 fell to 2.9 million euros (£2.3m) from 86.6 million euros (£68.8) in 2012.

The decline in profits was mostly due to a 14.4 million euros loss attributed to what it described as a ''donation" of securities to a Holy See foundation, a series of write-downs and the fluctuation in the value of the bank's gold reserves.

"This is a time of major change in the Holy See, not only for the IOR," said Cardinal-Prefect George Pell. "With the support of the Holy Father and the Council of Cardinals, we are creating simpler, more efficient structures for those serving the mission of the Catholic Church."

In a statement, the IOR said it has blocked 1,239 individual and 762 institutional client accounts and terminated around 3,000 accounts, adding that it "now focuses only on Catholic institutions, clerics, employees or former employees of the Vatican".

In recent years, the bank has come under scrutiny over allegations of corruption, money laundering and lack of transparency. Among the recent scandals, Monsignor Nunzio Scarano, a former senior Vatican accountant who had close ties to the IoR, is currently on trial accused of plotting to smuggle millions of dollars into Italy from Switzerland in order to help rich friends lower their tax bills.