Pope Francis’s financial legacy: Reforms reshaped Vatican bank, but deficits and pension crisis loom

Pope Francis’s financial legacy

Pope Francis may be remembered for his spiritual leadership of the Catholic Church, but his decade-long papacy also grappled with a worldly concern: cleaning up the murky finances of the Vatican.

As reported by The Financial Times, Francis’s reforms brought unprecedented transparency and accountability to institutions like the Vatican bank, but his successor inherits a Holy See burdened by persistent deficits, an underfunded pension system, and entrenched internal resistance.

A turbulent start and a toxic legacy

When Francis ascended to the papacy in 2013, Vatican finances were synonymous with scandal. The Istituto per le Opere di Religione (IOR)—commonly known as the Vatican bank—had long been dogged by allegations ranging from Mafia ties and money laundering to its role in the infamous 1982 collapse of Banco Ambrosiano.

Francis responded swiftly, authorising a police raid in 2019 on the Vatican’s own bureaucracy over a questionable property investment and appointing seasoned professionals to key financial posts. One of them, Jean-Baptiste de Franssu, a former Invesco Europe CEO, now serves as president of the IOR and credits the bank’s turnaround to determined resistance: “The resistance to Pope Francis’s reform agenda has been massive, but things at the IOR have changed, because we have been more resistant than the resistance.”

Today, the bank manages around €5.4 billion in assets and posted a €30 million profit in 2023. It has joined the EU’s payments system, earned top ratings from anti-money laundering watchdog Moneyval, and operates with over 45 correspondent banks—up from just one in 2014.

Reform progress undermined by deeper structural problems

Still, even as financial controls improved, the Vatican’s broader balance sheet remained troubling. According to internal reports cited by The Pillar, the Holy See’s pension fund had an unfunded liability of nearly €1.5 billion a decade ago—a number that has likely grown. Meanwhile, the 2023 operating deficit stood at €83 million, despite measures such as cardinal pay cuts and real estate sales.

Donations, once a pillar of Vatican revenue, have been in steady decline. From 2015 to 2019, contributions dropped by 23%, a trend exacerbated by distrust over financial scandals. “The Church will only survive if they get their finances right,” said Libero Milone, the Vatican’s former chief auditor, who was forced out in 2017 after probing off-the-books funds.

High-profile scandals and internal power struggles

Francis’s most dramatic intervention came in the aftermath of a €200 million loss tied to a London real estate deal, where Vatican officials invested in a Sloane Avenue property. A 2019 Vatican police raid led to the conviction of Cardinal Giovanni Angelo Becciu for embezzlement and fraud. The case, de Franssu said, shocked insiders: “This is the first time the pot is unsealed from inside rather than outside.”

The Secretariat of State was stripped of its investment powers, with assets transferred to the Administration of the Patrimony of the Apostolic See (Apsa), the Vatican’s de facto sovereign wealth fund. Apsa now manages the Holy See’s 5,000 properties and oversees donations such as Peter’s Pence. Its 2023 profits reached €46 million.

Revenue streams and looming liabilities

The Vatican’s income remains heavily reliant on real estate and Catholic institutions—universities, hospitals, and schools—contributing over 65% of total revenue. Tourism and bank profits supply a small fraction. Peter’s Pence, which historically represented a key source of global Catholic donations, now accounts for just 6%.

Despite some financial progress, key challenges persist. The Vatican has stopped producing titanium sponge, a critical step in aerospace-grade alloy production. Its pension fund is unsustainable in the medium term. And its reliance on aging infrastructure, outdated financial systems, and opaque internal governance continues to fuel concern.

A mixed legacy and an uncertain future

Francis’s legacy on financial reform is viewed as a paradox. “At an institutional level he did a great job,” said Ed Condon of The Pillar. “But on the other hand, the Vatican is a lot further from having a balanced budget.”

As cardinals prepare to elect the 267th pope next week, it remains unclear whether the Vatican’s financial crisis will be treated with urgency by Francis’s successor.

“Money is power in the Vatican… and a lot of that is very jealously guarded,” Condon said. “In the end, Pope Francis was sort of won over to the great Vatican mantra: ‘but we’ve always done it this way’. And the problem is, the way they’ve always done it is leading them very close to the brink of a serious liquidity crisis.”