Vatican bank heading into new turmoil with shakeup as pope mulls future of institution

The embattled Vatican bank is heading into a new round of turmoil, with the resignations of its president and board expected soon as Pope Francis mulls how to reform the institution blamed for some of the Vatican's biggest financial scandals, news reports and people familiar with the decisions said Tuesday.

It was this time last year that the top two managers at the Institute for Religious Works were forced out after a Vatican monsignor with millions deposited in the bank was arrested in an alleged money-smuggling plot.

They were soon replaced, but another round of resignations is expected in the coming days as Francis and his eight cardinal advisers meet to decide the bank's future, according to Italian news reports and two people familiar with the decisions.

The bank's current president, Ernst Von Freyberg, was appointed in February 2013 in one of Pope Benedict XVI's final acts in office. He has never been received in audience by Francis, who was elected on a mandate of financial and bureaucratic reform.

Italian newsweekly L'Espresso reported last week that Von Freyberg would soon resign, citing a clash with Francis' personal liaison to the bank over access to information.

A bank spokesman, Max Hohenberg, declined to comment Tuesday, saying only that the bank was working on its annual report.

An official familiar with the bank's operations also said Von Freyberg was expected to resign. A separate Vatican official said that beyond Von Freyberg, a broader shake-up was expected next week. Both requested anonymity because they are not authorized to speak publicly about internal discussions.

The five-year terms of the majority of the bank's five-member board expire in the fall, signaling they too will be leaving.

Next week, the Vatican's new economy minister, Cardinal George Pell, convenes his new economy council, formed to oversee and rationalize the Vatican's finances.

One of the ideas under consideration for the future of the bank is to restrict its activities to a purely depository institution for clergy, religious congregations and Vatican employees and shift its asset management services to a different entity. That would require different expertise at the top, and perhaps entail a full-time president rather than the part-time job that Von Freyberg, who helps oversee a family shipbuilding business in Germany, signed up for.

It remains unclear if Pell will take advantage of the power vacuum created by such high-ranking departures to bring the Vatican bank, which has traditionally operated as an independent financial institution within the Holy See, into his new financial orbit.


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