Vatican bank chairman to step down
The Vatican bank’s chairman is expected to step down as early as next week as a review under Pope Francis of the scandal-hit institution draws to a close.
Ernst von Freyberg, a German lawyer and manager, was appointed head of the Institute of Religious Works (IOR) – as the Vatican bank is formally known – last year by Pope Benedict before he renounced the papacy.
“This is the end of phase one. Phase two will see the integration of the IOR in the new financial architecture of the Vatican, but this will require more time” said a person close to the process who did not want to be named.
At the time of the appointment of Mr von Freyburg, some Vatican insiders were critical of his lack of experience in retail banking and also his low profile internationally.
Some senior advisers to Pope Francis say they have pushed privately for a more influential person who could help rid the Vatican bank of its reputation as a closed-door operation with little understanding of the working of the outside world.
The appointment of Juan Zarate, the former US government terrorism adviser, to the Vatican’s internal financial watchdog last month was part of a move by Pope Francis to appoint high-profile advisers to the bank.
Debate also continues with the Vatican and among Catholic advisers as to what extent the Holy See requires a full retail bank, say people with direct knowledge of the discussions. The annual report, which is expected to be published next week, is set to propose a much slimmer banking operation, say people familiar with the matter, but some advisers continue to seek the closure of the operation.
The probable departure of Mr von Freyburg, who only works part time, is expected to lead to the appointment of a full-time chairman. Doubts have been raised over whether the chairman is leaving willingly or because of internal clashes over the aim and the speed of reforms. The IOR declined to comment.
The Vatican said: “Obviously IOR is in a time of peaceful transition. The contribution of Ernst von Freyberg continues to be deeply appreciated and highly valued and further clarifications are possible, indeed likely, next week after the meeting of the Council for the Economy on Saturday.”
In April, Pope Francis confirmed that IOR would continue to exist, ending speculation that the bank could be closed. Since then, Mr von Freyberg has compiled a business plan for the restructuring of the IOR, with the support of economic commissions within the Vatican.
The governance report is being presented to a cardinal advisory committee that meets this week to discuss the modernisation of the Vatican finances as well as a new organisation for the Curia, the Holy See’s bureaucracy. George Pell, the Australian cardinal who has headed the secretariat for the economy since February, is joining the meetings.
Experts say that the overhaul, pushed by the pontiff, aims to simplify financial structures in the Vatican and channel all asset management activities, currently run by several institutions, under one entity. This could take up to a couple of years.
The appointment of Mr von Freyberg as head of the bank was among the last decisions made by Pope Benedict at the end of his papacy in 2013. He replaced Ettore Gotti Tedeschi, an Italian banker and professor of ethics, who was sacked in May the year before.
Since his arrival, Mr von Freyberg has pledged a “zero tolerance” policy for activities outside the IOR’s statute, in an effort to put an end to the embarrassing past of the institution.
In the past year, the bank has undergone a thorough screening of its 18,900 accounts, bringing the bank in line with international anti-money-laundering standards, and several investigations into suspicious activities have been initiated.