Pressure from the Roman Catholic spiritual pontiff to clean its coffers and get its act together had taken a toll on the 2013 profits of embattled Vatican Bank, more formally known as the Institute for Works of Religion (IOR).
In its 2013 annual report released Tuesday (July 8), the bank said total 2013 net profit reached only 2.9 million euros ($3.9 million), definitely a huge drop from the 2012 record of 86.6 million euros ($117.8 million).
It attributed the financial slump to the "painful but necessary process" of reform mandated by Pope Francis which ultimately paved the closure of thousands of accounts. Over 2,000 clients and 3,000 "customer relationships" were blocked and terminated because of the clean-up process.
Had it not been for the excruciating clean-up, its 2013 profits could have reached 70 million euros.
Most of the closed accounts were found to have been opened or owned by Italian clients, with assets worth around €200 million, who were later discovered that they do not have the right to bank with the Holy See.
Maintaining €6 billion worth of assets, the use of the Vatican bank, according to its statutes, is restricted to only the clergy, Vatican employees, and as well as Vatican embassies and diplomats.
"This is a time of major change in the Holy See, not only for IOR," Cardinal George Pell, an Australian prelate recently appointed as head of economy for the world's smallest city state, was quoted by the Financial Times. "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."
The reforms, nonetheless, showed a positivity as results for the first half of 2014 showed a net profit of €57.4 million.
Vatican Bank President Ernst von Freyberg said in a statement he had "proceeded with zero tolerance for any suspicious activity".
"We have carried out our reforms in this spirit and have not only drastically improved procedures to make the institute safer and more transparent, but have also put the institute's owner in a position to act on the basis of facts. It is fair to say that over the past months this often painful but very necessary process has opened the door to a new, unburdened future of the IOR - as a financial-service provider that is fully and solely dedicated to serving the mission of the Catholic church."