VATICAN CITY (AFP) - The Vatican bank, dogged by scandal and allegations of money laundering, has paid a colossal price for cleaning up its accounts, its 2013 financial statement showed Tuesday.
The bank said it had blocked the accounts of over 2,000 clients and shut down hundreds of others in a vast operation which saw its profits plummet to 2.9 million euros (S$4.9 million) from 86.6 million euros in 2012.
The ending of 396 "customer relationships" not eligible for accounts with the bank alone led to an outflow of funds of about 44 million euros, it said.
Bank president Ernst von Freyberg, who took over at the helm last year, said he had proceeded with "zero tolerance for any suspicious activity".
"This often painful but very necessary process has opened the door to a new, unburdened future of the IOR," he said in a statement.
The Institute for Works of Religion, also known as IOR under its Italian acronym, said that while the reforms had been costly, results for the first half of 2014 showed a net profit of 57.4 million euros.
The IOR does not lend money but handles funds for Vatican departments, Catholic charities and congregations as well as priests and nuns living and working around the world.
But the bank, which has a reputation for secrecy and intrigue, has a troubled history.
It was the main shareholder of the Banco Ambrosiano, which collapsed in 1982 amid accusations of laundering money for the Sicilian mafia.
The chairman of Banco Ambrosiano, Roberto Calvi - dubbed "God's Banker" in the media - was found hanging from Blackfriars Bridge in London that year in a suspected murder by mobsters.
More recently the bank has been investigated for money laundering by Italian authorities, with its director general and his deputy placed under investigation and forced to resign last year.
Pope Francis, who has called for a "poor Church for the poor", set up a pontifical commission in the wake of the scandal to propose ways to reform the bank.
The IOR said phase two of the clean-up operation would include a "new board and executive team, operating under a new governance structure", which is expected to see French businessman Jean-Baptiste de Franssu named as the new president.