Credit Suisse, the country’s second-largest bank, was long a favoured institution of the Holy See, especially the Vatican Secretariat of State, which reportedly kept hundreds of millions of euros of Church funds on deposit at the bank and used credit at the bank to finance international investments including the infamous London property deal.
Newsroom (12/10/2022 9:47 PM Gaudium Press) — The Holy See has declined to comment on whether the Secretariat of State and other curial departments have complied with a papal deadline to move all funds and accounts from foreign banks to Vatican City.
The 30th September 2022 deadline came as a Swiss bank with a long Vatican history and multiple ties to the current financial scandal has come under scrutiny for mounting losses and its collapsing share price. Issues at the bank have raised questions about whether Church funds remain on deposit there, including in frozen accounts as part of the Vatican’s investigation into the Secretariat of State’s financial affairs.
Several Vatican departments, most notably the Secretariat of State, have a long history of banking Church funds with financial houses in Italy and Switzerland. Francis issued the order as part of his ongoing restructuring of the Holy See’s economic structures and regulations.
The passing of the curial deadline coincided with increased scrutiny and market pressure falling on Credit Suisse, the Swiss bank responsible for introducing the Vatican to many defendants in the ongoing financial trial.
The Swiss financial house has posted billions of euros in losses in recent months and has said it could sell off key departments within its investment banking arm, and has repurchased some billion of its own debt in efforts to reassure markets and investors after a string of losses and scandals have rocked confidence in the institution — stock in the bank is currently trading at half its value from a year ago.
Last week, the governing board of the Swiss National Bank told Reuters that it is “monitoring” the bank’s situation ahead of restructuring plans set to be announced later this month. The SNB, which oversees banks in the country, has previously refused to comment on Credit Sussie’s situation, even as speculation has mounted that it might step in to shore up or nationalize the bank should it become at risk of failing.
Credit Suisse, the country’s second-largest bank, was long a favoured institution of the Holy See, especially the Vatican Secretariat of State, which reportedly kept hundreds of millions of euros of Church funds on deposit at the bank and used credit at the bank to finance international investments including the infamous London property deal.
In 2020, the Swiss newspaper NZZ am Sonntag reported that Swiss authorities had frozen tens of millions of euros across several accounts at different Swiss banks after Holy See prosecutors sent a formal request for help examining the Secretariat of State’s financial dealings.
At that time, a Credit Suisse spokeswoman acknowledged to NZZ that accounts at the bank were involved in the investigation but said, “Credit Suisse is not the subject of the Vatican’s investigation.”
Credit Suisse and the Vatican Financial Trial
In June, Raffaele Mincione, the investment manager whose business dealings with the Vatican triggered the London property scandal, named Credit Suisse in a lawsuit related to the Holy See’s investments with him.
Mincione claims that the bank misled him about the source of the Vatican’s money, failing to disclose it was drawn from Peter’s Pence and other funds reserved for charitable purposes.
As previously reported, in 2014, the Secretariat of State, under the management of the-sostituto Cardinal Angelo Becciu, was introduced to Mincione by then-Credit Suisse banker Enrico Crasso. The secretariat secured loans from the bank and another Swiss financial house, BSI, to invest some 200 million euros in Mincione’s Athena Global Opportunities Fund.
Becciu, Mincione, and Crasso are all currently on trial for financial crimes in Vatican City.
Later in 2014, Crasso left Credit Suisse and set up his own investment company, with the Secretariat of State becoming one of his largest clients. Using Sogenal’s Centurion fund, Crasso invested Church funds in a series of controversial projects, charging millions of euros in fees even while the investments lost money. The fund shared an office with its Malta-based fund manager, Gamma Capital, owned by a former senior banker at BSI.
Swiss banking authorities shuttered BSI in 2016 after a regulatory inspector’s report found evidence of serial breaches of financial rules, including anti-money laundering regulations.
This method was used to help disguise the existence of the loans and the investments on internal Vatican balance sheets, a practice prohibited under norms issued by Pope Francis.
In 2018, the Holy See withdrew early from the fund, incurring tens of millions of euros in penalties and forfeiting the balance of their investments with Mincione in exchange for a London building at 60 Sloane Ave., paying a total of 350 million euros for the property which was sold at a loss of more than 100 million earlier this year.
Mincione’s lawsuit alleges that Credit Suisse “made false representations and statements in subscription agreements” pertaining to the Vatican’s initial investment in the Athena fund.
In 2020 Mincone launched a lawsuit against the Holy See in a UK court, seeking a ruling that he acted in good faith over his dealing with the secretariat after official Vatican media described Mincione’s management of investments as “speculative” and a “conflict of interest.”
Previous reporting has demonstrated that Mincione invested millions of Vatican funds into his own companies and speculative investment projects, including the London building he owned through a series of nesting holding companies in the Channel Islands.
Mincione has also faced questions about his relationship with Gianluigi Torzi, the Vatican’s chosen broker in the acquisition of the London property, accused of attempting to extort the Holy See for millions in the course of the building’s final purchase.
During years the Secretariat of State invested in the Athena Global Opportunities Fund, Mincione invested Vatican money in debt products marketed by Torzi, some with links to mafia-affiliated companies. Mincione invested Vatican money into one such debt product called Sierra One bond,
Torzi, in turn, used his companies to lend Mincione tens of millions of euros during the same period.
The Vatican trial is ongoing.
– Raju Hasmukh with files from The Pillar