God's Bankers: Not Afraid

Now of blessed memory, the man called "Chink" once famously said that you couldn't run the church -- or, for that matter, anything else -- "on Hail Marys."

In that light, even before yesterday's upshot of the Dow, the Holy See sent out one of its top money-men to assure the world that the assets are safe:

Angelo Caloia said in interview released Monday, days ahead of publication in Famiglia Cristiana magazine, that the bank only makes safe investments.

"Our assets are solid and we have no lack of liquidity," said Caloia, president of the supervisory council of the Institute for the Works of Religion — the bank's official name.

The bank's depositors are religious orders, dioceses, Roman Catholic charities, other religious organizations and the Vatican itself.

In a rare interview, Caloia said the bank stayed away from derivatives — the financial instruments blamed for many of the steep loses in the current financial meltdown.

Caloia was also quoted as saying that the bank makes no loans and as a result "we have no uncollectable losses."

An Italian economist and banker, Caloia took the bank's helm in the 1980s after the collapse of Banco Ambrosiano, which had the Vatican Bank as its main shareholder.

The collapse resulted in one of Italy's largest fraud cases, but the Vatican denied any wrongdoing while agreeing to pay $250 million to Ambrosiano's creditors.

Other officials have said 80 percent of Vatican investments are in low-yield government bonds and 20 percent in stocks.

Unlike the Vatican itself, which each year makes public its operating budget, the bank makes few disclosures.

...in late September, however, Caloia's summary was supplemented by an extensive look at a report on the Holy See's finances leaked to The Tablet:

The report states that the Holy See’s total assets at the end of last year added up to nearly 1.4 billion euros or more than £1 billion [US$1.76b]. It reveals that the Vatican’s financial advisers shrewdly spotted the risks of keeping the Church’s money tied up in shares and switched to safer investments, including [~US$26.3 million in] gold....

Among the most eye-catching details are the costs of the Vatican’s two main media enterprises. The Holy See’s most costly ventures are Vatican Radio, which in 2007 ran at a 24.3 million-euro (£19.2m [US$33.75m]) deficit, and its newspaper, L’Osservatore Romano, which lost about 4.8m euros (£3.8m). Another interesting detail is that salaries, taxes and other expenses for some two dozen cardinals who work in the Roman Curia run to more than 3m euros (£2.37m [US$4.16 m]) a year. can institutions and agencies. The monetary value of the Holy See’s land, buildings and rental properties, its cash holdings and stock investments are also listed. But the location of these properties and the names of the companies of which the Holy See is a shareholder are not divulged.

There is a surprising lack of detail and transparency in the financial report that was sent to the bishops, the men who are expected by canon law (can. 1271) to help bankroll the Roman Curia. The bishops evidently trust that the money is being used wisely. As already reported last July in The Tablet, episcopal conferences and religious orders from around the world chipped in some £68.7m [US$120.6m] last year, just slightly more than they gave in 2006....

[O]nly scant detail is given on what most people would consider the “essence” or core of the Holy See – those offices and bureaux that help the Pope exercise “central governance of the Church”. The financial report lists them under the heading of “institutional activities”. They include the Secretariat of State, the nine Congregations, the three tribunals, the 11 pontifical councils and other offices; among which are the Synod of Bishops, the papal household, the Office of Papal Liturgical Celebrations, the Apostolic Library, the Secret Archives, and the Pontifical Academy
of Sciences. The financial report also lists “the Diocese of Rome” and “certain cultural and scientific institutions for the formation of the Clergy” under this section. The report says this sector cost the Holy See some 29.7m euros (£23.5m) last year, despite the fact that more than 86m euros (£68m) in donations from episcopal conferences, religious orders and other “institutions, foundations and entities” were funnelled here to offset its expenditures. But it is impossible to know where exactly all this money went because there are no itemised figures for the separate offices –
with one exception. “Papal embassies” are listed as having cost 20.1m euros (£15.9m) in 2007, some would say a bargain price for the Church’s efforts at diplomacy. However, most of everything else listed under “institutional activities” – including how much money is spent for the papal household or on new liturgical vestments and accessories – remains shrouded in mystery....

The Holy See owns some 424m euros (£336m [US$590m]) worth of property in Italy, Switzerland, France and England. Propaganda Fidei alone is responsible for some 53m euros (£42m) of that, mostly in Italy. Financial experts would consider this a “minimal property portfolio”, given the Holy See’s total assets. However, last year these combined properties pulled in nearly 56m euros (£44m) in rental income and another 950,000 euros (£752,000) in agricultural activity.

PHOTO: Getty Images

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