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Vatican bank opens its books in transparency drive

Tuesday, 1 Oct 2013 | 10:18 AM ET
The Vatican
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The Vatican

The Vatican bank published its annual accounts for the first time on Tuesday in an attempt to boost transparency and distance itself from a string of scandals.

The bank - known as the Institute for Religious Works, or IOR – described 2012 as an "economically successful year" for its customers, as net profit shot up to 86.6 million euros ($117 million) – a 325 percent rise on the year before.

The report comes amid calls for more transparency at the bank, as it attempts to rebuild its reputation following a number of investigations into its finances by Italian prosecutors.

(Read more: Vatican Bank Director, Deputy Resign Amid Scandal)

"With the publication of our Annual Report, we are meeting our commitment to provide the transparency about our activities which the Catholic Church, our customers, the Vatican Authorities, our correspondent banks and the public rightfully expect," the bank's president, Ernst von Freyberg, who was appointed this year, said in a statement.

It also comes three months after the bank's director, Paolo Cipriani, and deputy director, Massimo Tulli resigned, which the Vatican described as "in the best interests" of the institution and the Catholic Church at the time.

The bank has been dogged by controversy for decades, and has been accused of doing business with organised crime. More recently, magistrates in Rome froze 23 million euros held by the IOR in an Italian bank account in 2010, as part of an money laundering probe.

(Read more: Power Struggle on Reforming Vatican Bank)

And last year, a scandal known as "Vatileaks" saw Pope Benedict XVI's former butler accused of leaking documents alleging corruption in the Vatican's dealings with Italian companies.

A report by Europe's anti-money laundering committee, Moneyval, published in July 2012, also identified serious failings at the bank and indicated that it fell short of international transparency standards.

But despite a tumultuous year, the economic conditions of 2012 helped boost the bank's results.

"This (2012's) increase in net profit was mainly due to favorable trading results and higher bonds values, resulting from the general decrease of interest rates in the financial markets throughout the year," the report said.

(Read More: How the Pope's Retirement Package Compares to Yours)

The bank, which has 18,900 clients and oversees just under 5 billion euros in assets, however, warned that its performance in 2013 was unlikely to be as strong.

"Overall, we expect 2013 to be marked by the extraordinary expenses for the ongoing reform and remediation process, and the effects of rising interest rates," von Freyberg added.

By CNBC's Katrina Bishop. Follow her on Twitter @KatrinaBishop

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