LF1748979

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Università L. Bocconi Undergraduate School
Milan, Italy
Bachelor of Business Administration and Management (CLEAM)
The impact of the Vatican Bank’s lay board on asset prices
Wei Wu
ID: 1748979
November 2016
Advisor: Professor Viktar Fedaseyeu

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Index
Abstract ……………………….…………………………………………………………….…..7
1. Introduction ……………………………………………………………………………….....8
2. Institute for the Works of Religion…………………………………….……...…..…. 10
2.1 The history of the IOR……………………...……………………………….…..…..10
2.2 Main functions of the IOR……………………....…………………………………. 11
2.3 Peculiarities …………………...…………………………………………………….. 13
3. Governance of the IOR today ………………………...………………………..……… 14
3.1 Commission of Cardinals …………..……………………………………………… 15
3.2 Prelate…………… …………………………………………………………………... 16
3.3 Board of Superintendence …….…………………………………………………... 16
3.4 Directorate …………………………………………………………………………... 18
3.5 Board of Auditors …………………………………………………………………... 18
3.6 The Future of IOR …………..…………………………………………………….... 19
3.7 Supervisory Authority ………………………………...…………………………... 19
3.7.1 Financial Intelligence Authority ……………………………………….. 19
3.7.2 Audit Company ……………………………………..………………….….. 19
3.8 Supervisory Authority ………………………………...…………………………... 19
3.9 Important IOR Reforms …………………….………...…………………………... 20
3.9.1 2010 Reforms ……………………….………………………………….….. 20
3.9.2 2013 Reforms ……………………….………………………………….….. 21
3.9.3 2015 Reforms ……………………….………………………………….….. 22
4. Board of Supervisors composition since 1942 ……………………………….……. 22

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4.1 First President of the IOR Board: Bernardino Nogara……….….………….….24
4.2 Second President of the IOR Board: Massimo Spada…………....………….… 26
4.3 Third President of the IOR Board: Arch. Paul C. Marcinkus……....………....28
4.4 Fourth President of the IOR Board Angelo Caloia………………….….……… 28
4.5 Fifth President of the IOR Board: Ettore G. Tedeschi……...…………….…… 32
4.6 Sixth President of the IOR Board: Ronaldo Hermann Schmitz………......…. 33
4.7 Seventh President of the IOR Board: Ernst von Freyberg …………...…….... 34
4.8 Eighth President of the IOR Board Jean-Baptiste de Franssu ………….…...34
5. Empirical Results …………………...……………………………………………….…. 37
5.1 Data on asset prices of firms connected to members of the board ………….. 34
5.2 Asset prices analysis around Papacy change………………………….……….. 45
6. Bibliography and Webography ………….………………………………….………. 47

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Abstract
This paper studies how the IOR since its foundation in 1942 has impacted the
asset prices of the firms connected to the members governing the institution. The
structure and governance has dynamically changed according to the financial expertise
of the appointed IOR’s Presidency and therefore the figures working alongside with him.
These changes occur due to erratic ideologies of the incumbent Pope at the time. Even
though the ultimate shareholder of the institute is found in the figure of His Holiness,
throughout the decades, the IOR has had different degrees of discretionary power.
Therefore, through this paper, we have found out that the stock return in the seven-day
period around the papal death and subsequent announcement of a new pope provide no
explanatory power in the effects on asset prices of the connected firms.

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1. Introduction
The Istituto per le Opere di Religione (IOR) is a private institute providing credit
founded in 1942 by Pope Pius XII and located in the Vatican City. Often it is referred as
the “central bank” of the Catholic Church, a function which is performed by the
Administration of the Patrimony of the Apostolic See (abbreviated in APSA).
The Statute of the institute (amended subsequently by Pope John Paul II in 1990),
namely Article 1, specifies that the objective is “to provide for the custody and
administration of goods transferred or entrusted to the Institute by physical or juridical
persons, designated for religious works or charity. The Institute can accept deposits of
assets from entities or persons of the Holy See and of the Vatican City State.” The Statute
approved in 1990 is still prevailing and it is fundamental to understand, among other
aspects, who is entitled to minister the IOR governance.
In fact, we will discuss in particular how the IOR has managed its governance over
the years and further explain how today is a critically different establishment with
respect to the financially flourishing past.
The governance is formed by five components, which eventually all report back to
the Pope in charge: the Commission of Cardinals, the Prelate, the Directorate, the Board
of Superintendence and the Board of Auditors. The institute is managed by banking
professionals and guided by a president (elected among the five lay members, with a five-
year and renewable mandate) starting from 1990. Among these people who governed the
IOR, some people held important positions and had business interests elsewhere. We will
be focusing in how the Vatican Bank, thanks to the network of connections of many

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sagacious and knowledgeable figures, had impacted the markets throughout the XX
century up to today.
We can observe historically more or less charismatic personalities holding the
presidency for up to 18 years (outliving 3 Popes consecutively) or for less than a Papacy,
a phenomenon mostly detected in the modern days after the almost 4 decades of influence
by the Archbishop Paul Casimir Marcinkus and his successor Angelo Caloia.
The empirical analysis aims to establish a relationship between the firms
identified to be connected to the members governing the IOR and the change of Papacy
since the IOR has entered fully in its functions. We count 7 Papacies and 8 IOR
Presidencies. We then can distinguish our diagnosis in two main components. First, we
identify the relevant firms for the analysis and include them in a general portfolio to
compute the stock returns around Papal deaths. Consequently, for the same group of
firms we will proceed on capturing the movements around the announcement of a new
Pope. The results should emphasize the fact that the firms indeed, primarily in the long-
term, have experienced an above average return (alpha) and a lower beta with respect to
the market. However, the analysis has disproved this hypothesis by raising a further
doubt, that is the exploitation of private firms and the value retaining by these thanks
to the possibility of lower compliance expectations.

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2. Institute For The Works Of Religion
2.1 The history of the IOR
The precursor of the IOR named the Commission of Religious Works, dates back to
11 February 1887 with the contribution of Leone XIII. Also Pius X in 1908 has confirmed
its prerogatives for an autonomous management of the Commission. Subsequently, in
1929, thanks to the Lateran Treaty, the Republic of Italy recognizes the Holy See as an
independent State. In order to compensate for the loss, due to the expropriation of the
Papal lands, a large sum was paid to Vatican as indemnity. In this occasion, the Special
Administration for Religious Works is created, guided by the layman Bernardino Nogara,
chosen by Pius XI, who will invest part of the reimbursement capital in decisive sectors
of the Italian economy. Only in 1942, Pius XII, will provide the imprinting for the creation
of a proper Institute for Religious Work by updating its statutes.
The IOR, according to data from 2008, employs 130 people and had an estimated
capital of €5 billion and 44,000 bank accounts registered to Vatican employees, clerics
and a selected group of private institutions. The number of accounts have since reduced
to less than a half to 17,400 in 2013 and since then following a 3-year investigation into
illegal financial activity another 5,000 accounts have been shut down, leaving a roughly
outstanding 12,000 accounts.
The religious institution detains considerable foreign investments, mainly in
sovereign bonds and low risk portfolios, which earns an average yearly yield in the range
of 4 to 12%, that is net return, since within the Vatican state income tax is not applicable.
Not to mention that profits are not distributed to shareholders because there are none
but donated to religious and charitable works and projects.

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Publicly, the bank’s existence is to serve the Catholic Church, as required by the
regulations, called chirograph (a handwritten declaration).
The Vatican City is home to three financial institutions:
• Administration of the Patrimony of the Apostolic See (abbreviated in APSA) which
serves as the central bank to the Vatican
• Economy ministry
• Institute of Religious Works or Vatican Bank (IOR)
Unlike in a conventional financial system, the IOR does not bear any responsibility
towards neither the APSA nor the Ministry of Economy. In fact, it functions
independently through a multi-level board of directors composed of both religious and
laymen.
2.2 The functions of the IOR
In this part we will present the main functions of the IOR, through the
identification of a common theme that allows eventually the institution to fully have
operated like it did in the history but not so much in modern times.
Apparently the presence of these important institutions may seem reductive, so what
exactly has prompted a religious authority to establish such an institution in the
currently smallest sovereign territory in the world, which only stretches 0,55 km2?
We should not neglect the ramifications that a religion implicates. In fact, if the sovereign
state is just as small as a fraction of an Italian province, in every fraction of this
historically 98% Catholic nation at least one property is managed by the Church, which
also means that a compounding of the territories may give us a respectable size in terms
of assets that requires the Vatican Bank to manage.
The main functions are as follows:

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• To safeguard the indemnity entrusted by Mussolini in 1929 to the Church for
surrendering the Papal territories to the state. The amount received in 1929 of
$92 million has grown in 1942, thanks to Nogara’s financial acumen, to $1 billion.
• To safekeep the income from German Church taxes to the Vatican decided by an
accord in 1933 which stipulated that all Catholic workers should pay a 9% tax on
income to the Church. The cash flow would amount to $100 million per year
• To invest Church’s assets and streams of income during World War II, since the
independent Vatican City state was a neutral country. The uncertainty relating to
the outcome of the military actions, urged the institution of a bank which could
unlock the possibility of mitigating the risks by investing its resources in
whichever power was considered to be at the time in a winning streak (Axis or
Allied powers) without incurring in the hazardous liability of having assets seized
or impounded.
Currently it is unprovided of its investment management function. The APSA will
be taking over the management of the Vatican’s property, purchasing and
personnel portfolio.
• To exploit the extraterritoriality and its sovereignty status granted by the treaties.
This has benefited the Church in the 60’ through the 2000s and began to change
when transparency and regulatory issues were raised. In fact, the IOR has been
recognized as a private institution not vested of the immunity of jurisdiction and
the Vatican has renounced the prerogatives that Sovereignty brings by partaking
to the Euro.
• To appoint their own management team. This allows to develop an easier
investment strategy without using international banks as brokerage houses as it
did early on when the bank was still at its embryonic stages with Morgan House
and the Rothschild family. So we assist at a disintermediation that becomes, later

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on, a deep cooperation with the same financial firms that have aided the IOR in
finalizing the deals. Naturally, an in-house management team consents an
alignment of the stakeholder’s interests (not the shareholders because there are
none) and therefore a reinforcement of the IOR’s reputation in closing business
transactions.
• To avoid taxes, in fact, today the Bank under Cardinal Pell has yet to agree to
undergo an assessment in order to be classifiable in the TJN’s Financial Secrecy
Index. Nevertheless, it has agreed on the 1 April 2015 to sign a tax treaty which
will obligate both parties (Holy See and Italy) to share financial and tax
information, as part of a broader plan by Pope Francis to purify the IOR from the
inside.
• To oversee and manage the salary and pension accounts for Vatican employees
instead of relying on foreign financial systems
2.3 Peculiarity of the IOR
Unlike a conventional institution, it does not issue loans or securities or other
financial products that allows investors to bet on the performance of the bank. Moreover,
as observed, the IOR declares to be an autonomous institution, possessing no corporate
or ecclesiastical connections to any lay agency or church domain. The fact that the
Vatican was left out of the offshore haven countries blacklist could be explained due to a
lack of a proper banking system, making it the only sovereign country in the world
experiencing this condition. In June 1941, the amendment to the block list still not urge
the Treasury to revamp the discussions relative to this matter. This may largely be due
to the fact that despite being referred as a “bank”, it is not technically a bank. Rather,
we should consider it as an organism that provides supportive services to entities
belonging to the Catholic Church present in over 150 countries around the world.

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The Pope has always received donations, both from the faithful through Peter’s
Pence and the Bishops, who are explicitly called to donate according to the Canon law.
So, to a certain extent, the Holy See always had to be enterprising with the received
capital. However, with the loss of the Pontifical State’s territories the investment activity
became impellent
and the only solution to survive as an entity.
The institute operates through a single office and it is subject to AIF (Autorità di
Informazione Finanziaria) regulation, an entity that exercises financial supervision in
the Vatican City. As of 30th June 2014, the IOR was serving around 15,500 customers
and €6 billions of assets under management.
Today, commissions and service fees applied to customers represent the main
source of income of the IOR, which are then intended to religious works and charity. In
order to fully function the institute employs around 100 people.
3. Governance Of The IOR: today
The IOR structure and mission had been established and approved through
chirograph in 1 March 1990 by Pope John Paul II. Since then, the governance structure
is composed of five elements: Commission of Cardinals, Prelate, Board of
Superintendence, Directorate and Board of Auditors.
We may distinguish two categories of instruments of control: the internal and the
external. The internal instruments of control are the following: Risk Management (it is
the process by means of which investment risk is measured and estimated, followed by
the design of strategies to manage these risks), Anti money laundering and compliance,

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Internal Audit and the Board of Auditors which is also one of the five elements of the
governance structure.
The external instruments of control are the following: Commission of Cardinals,
presided by the cardinal Secretary of State, the Financial Intelligence Authority (or AIF)
and an internationally accredited audit firm to certify the balance sheet (starting from
1990).
3.1 Commission of Cardinals
The Commission supervises the IOR’s compliance of the Statute’s norms. On 10
January 2015 the Statute was subjected to a modification by pontiff Francis who declared
thereafter with Rescriptum ex audientia, whereby the Commission will increase the
number of its cardinals by one from five to six. Moreover the President of the Commission
has formalized the appointment of a non-voting general Secretary to be included within
the Board of Superintendence.
Currently the members are the following (all to be referred as Cardinals): Cardinal
Josip Bozanic (Croatia), Cardinal Santos Abril y Castello (Italy), Cardinal Thomas
Christopher Collins (Canada), Cardinal Pietro Parolin (Secretary of State), Cardinal
Christoph Schönborn (Austria) and Cardinal Jean-Louis Tauran (President of the
Pontifical Council for Interreligious Dialogue)
The Commission of Cardinals supervises the Institute’s observance of its Statute’s
norms. Its functions are identified as follows:
a) It appoints and removes members of the Board of Superintendence;
b) It deliberates, after reviewing the financial statements and analyzed IOR’s own
financing needs, the distribution of profits;
c) It proposes to the High Authority changes to the Statutes;

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d) It deliberates, the compensation due to members of the Board of
Superintendence;
e) It approbates the appointment and the expulsion of the Director General and
of the Vice-Director made by the Board of Superintendence;  
f) It deliberates any possible issues regarding members of the Board of
Superintendence and the Directorate;
Members of the Commission of Cardinals are appointed for a five-year mandate, which
can be renewed.
3.2 Prelate
The Prelate is appointed by the Commission of Cardinals. The Prelate:
a) Oversees the activities of the Institute and may have clearance to its archives;
b) Performing Secretariat functions by participating, in meetings of the
Commission of Cardinals and drafting the minutes of the meeting;  
c) Attends the meetings of the Board of Superintendence;  
d) Submits his reviews to the Commission of Cardinals, after having informed the
Board of Superintendence.  
Msgr. Battista Mario Salvatore Ricca, after a two-year vacancy since 2011, was
appointed Prelate of the Institute in June 2013.
3.3 Board of Superintendence
The Board of Superintendence is accountable for the administration and
management of the Institute, as well as the oversight and supervision of financial,
economic and operational activities. In particular, the Board has the following
responsibilities:

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• Developing general policy guidelines and fundamental strategies for the
activities of the Institute in agreement with its institutional purpose. 
• Determining the principles for the implementation of yearly programs and
purposes of the Directorate and approving its propositions.
• Validating the economic-financial activities of the Institute.  
• Monitoring the observance with predetermined programs and objectives, on the
subject of investments and other activities.
• Delineating the most appropriate financial structure for the Institute, through
a proposal in which it is spelled out the best way to improve the structure, and
in general the best means instruments by which to increase its assets in the
context of correct obedience to financial rules and in compliance with overall
moral purpose and mission of the Institute.
• Recommending the Commission of Cardinals changes to the Statutes provided
a is granted through an unanimous vote by the Board of Superintendence.
• Arranging the issuance of the Regulations, required to provide a detailed
description of the powers and competencies of both the Board and the
Directorate. 
• Delegating signing power in the name of the Institute to the Director General
and, at whom proposal, to the Vice-Director, Managers and Officers, according to
the practices described in the Regulations.
• Approving the Financial Statements prepared by the Directorate. 
The members of the Board of Superintendence are nominated by the Commission
of Cardinals serving a renewable mandate of five years. The Board consists of six
members and a non-voting secretary. Currently the members are as follows: Jean-
Baptiste Douville de Franssu (President), Clemens Börsig, Mauricio Larráin, Mary Ann
Glendon, Carlo Salvatori, Michael Hintze and Msgr. Alfred Xuereb (non-voting

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secretary).
In the next chapter we will be analytically examining the Board of
Superintendence throughout the IOR history and in general the laymen participation in
the institution in order to find out eventually the financial implications for the companies
that these people are or were connected to.
3.4 Directorate
The Directorate is responsible of the entire Institute’s activity and is held
accountable before the Board of Superintendence. The Directorate is appointed by the
Board of Superintendence with the approval of the Commission of Cardinals and it is
composed currently by two members: Gian Franco Mammì (General Director) and Giulio
Mattietti (Vice-Director with delegated functions).
3.5 Board of Auditors
The Board’s main duties are:
• Execute at least quarterly an administrative and accounting overhaul of the
accounting books and records
• If requested by the Board of Superintendence, it may proceed with internal
audits and other inspective operations
• Examine the annual balance sheet with the Directorate report and the relative
supporting documents, to which the Board will express written observations to
be submitted to the Board of Superintendence and it s also taking the
responsibility of informing both the Directorate and the Prelate
The Board of Auditors is composed of three members chosen by the Board of

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Superintendence for a maximum mandate of three years. However, they can be
reconfirmed.
3.6 The future of IOR
In the next three years, it has been reported that the Statutes will be reviewed
and the activities redisegned with two main strategic priorities:
• Reinforce IOR’s business
• Move gradually the management of the capital to a new institution named Vatican
Asset Management
The objective is to overcome the duplication of efforts exhibited by the Vatican
institutions and concentrate IOR’s activities on financial advisory and the payment
service for the clergy, congregations, dioceses and lay employees at the Vatican.
3.7 Supervisory Authority
3.7.1 Financial Intelligence Authority
The IOR is overseen by the Financial Intelligence Authority (AIF), a regulatory
authority established by Pope Benedict XVI, which became operational in 2011. The
President of the AIF along with the board members are appointed by the Pope.
The AIF is expected to enact complex and delicate executive dispositions,
fundamental to assure that subjects of the Holy See and of the Vatican comply with the
new and important anti-laundering and anti-terrorism obligations starting from 1 April
2011.
3.7.2 Audit company
Since 2009, the balance sheet is certified by Deloitte. Starting from 1995 the
balance sheet is drafted according to the International Accounting Standard (IAS). From

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October 2010 to July 2011 Deloitte Consulting has cooperated with the Institute in order
to improve the control systems on AML-CFT (Anti Money Laundering – Combating the
Financing of Terrorism, an international law against money laundering and terrorism
financing)
3.8 Transparency issues
It has been long debated the stance of the IOR in terms of accountability measures.
The IOR’s finances has been subject to speculative estimations and the environment in
which they operated was never fully understood if not through a careful reconstruction
and a precise interpretation of documents retrieved in numerous foreign central banks
that have cooperated historically with the Vatican Institute. In 2012, the first annual
report of the IOR was published, a move that was intended to broaden the initiative of
illustrating the mission, the activities and the financial data of the Institute to the public.
Moreover, the official website was only launched on 31st of July 2013 which displayed
financial data referring only to the previous year.
The annual report consists of:
• An analysis on the operations executed in the given year
• Information on the corporate governance including legal context
• A forecast in terms of operations for the coming year
• Cash flow statement as of 31/12 of the current year, accompanied by previous
year’s data to better compare
3.9 Important IOR reforms
3.9.1 2010 Reforms
1st January 2010, the monetary convention between the EU and the Vatican State
is enforced. Such a convention completes the agreements between the Vatican and the

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Republic of Italy established in 2000 and it obliges the Vatican to align the interests
according to European regulations on transparency regarding money laundering
activities, bank frauds and counterfeit bills. On the 30th December 2010, Pope Benedict
XVI institutes the Financial Intelligence Authority (AIF) for supervision and informative
purposes to prevent and thwart money laundering and terrorism financing.
3.9.2 2012 Reforms
On 28th June 2012 the IOR allows to be interviewed for the first time by a group
of journalists guided by the director general Paolo Cipriani and the four members of the
Board of Superintendence. Cipriani stated that in the IOR there were no numbered
accounts and moreover since 1996 a traceability system has been operating for every
account.
On 18th July 2012, Moneyval, the European Council division that evaluates the
anti-laundering systems publishes its first report related to the Vatican. The institute
complied to 9 out of 16 recommendations (considered a positive pass), on aspects such as
efforts provided against money-laundering, confiscation measures, privacy laws,
documentation, mutual legal assistance, penal treatment regarding terrorism financing
and international cooperation among others. Therefore, at this stage it was strongly
recommended to the IOR to be subjected to a prudential vigilance of an independent
supervisor.
3.9.3 2013 Reforms
Since May 2013, an external audit company, the American Promontory, is
performing an inspection of all 18,900 IOR accounts in order to verify the adequacy of
the standards required by the international regulations. On 28th November 2013, to
allow a better harmonization with the “universal mission of the Apostolic See”, the Pope

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appointed a delegate in the commission and the board of Superintendence, mons. Alfred
Xuereb.
3.9.4 2015 Reforms
In January 2015, the Institute held a press conference, in which Pope Francis,
through the “Rescriptum ex audientia Ss.mi” presented by Cardinal Santos Abril y
Castellò, modified the Statute of the IOR with the objective of increasing respectively the
number of the members from five to six of both the Commission of Cardinals and the
board of Superintendence. Simultaneously, the sixth member of the Commission of
Cardinals, archbishop of Zagabria, Josip Bozanic, was appointed. In the same occasion,
the president of the Commission has formalized the appointment of a non-voting General
Secretary to be included in the board of Superintendence.
4. Board of Supervisors composition since 1942
In this chapter I have compiled a list of the board members behind the strategic
planning of the IOR. In particular, as we have anticipated earlier, the board will have a
structured composition only after the 1990s.
Table 1. Detailed Board Composition
Board components In office Period
Bernardino Nogara:
• Massimo Spada
• Luigi Mennini
• Raffaele Quadrani
• Henri De Maillardoz
27/06/1942-1954
27/06/1942- 1954
27/06/1942 – 02/1987
27/06/1942 -
27/06/1942 - 1967
Massimo Spada:
• Henri De Maillardoz
• Luigi Mennini
• Pellegrino de Strobel
1954-1971
27/06/1942 – 1967
27/06/1942 – 02/1987
1960 – 02/1987

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Archbishop Paul Casimir
Marcinkus:
• Luigi Mennini
• Pellegrino de Strobel
1971- 03/1989
27/06/1942 – 03/1989
1960 – 02/1987
Angelo Caloia:
• Philippe De Weck
• Jose Angel Sanchez Asiain
• Theodor Pietzcker
• Thomas Macioce
• Robert Studer
• Ronaldo Hermann Schmitz
• Manuel Soto Serrano
03/1989-23/09/09
03/1989 – 1997
03/1989 – 2006
03/1989 - 2006
03/1989 – 04/08/1990
2001-2009
2007-2012
2007-2012
Ettore Gotti Tedeschi:
• Carl Anderson
• Giovanni de Censi
23/09/09-24/05/12
23/09/09 – 23/09/14
23/09/09 - 01/2011
2007-2012
2007-2012
Ronaldo Hermann Schmitz
(ad interim):
• Carl Anderson
• Antonio Maria Marocco
25/05/12-15/02/13
23/09/09 – 23/09/14
01/2011-2012
2007-2012
Ernst von Freyberg:
• Carl Anderson
• Antonio Maria Marocco
15/02/13 - 09/07/14
23/09/09 – 23/09/14
2011-2012
2007-2012
15/02/13- 2015

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Jean-Baptiste de Franssu:
• Prof. Mary Ann Glendon
• Sir Michael Hintze
• Mauricio Larrain
• Clemens Börsig
• Mons. Xuereb
• Carlo Salvatori
09/07/14 – present
09/07/14 – present
09/07/14 – present
16/09/14 – present
16/09/14 – present
28/11/13 – present
16/09/14 – 26/05/16
15/02/13 – 01/01/15
4.1 First President of the IOR Board: Bernardino Nogara
Born in 1870, he graduated with full honours in industrial and electrical
engineering at Politecnico di Milano, where he got an interest in mining activities. His
classmate Giulio Martelli, who comes from an important family that owns two mines in
Valsassina, played an important role in influencing him. After a brief mining experience
in Wales (1899-1901), Nogara will wage furthermore experiences abroad namely in
Turkey, Bulgaria, Greece and Germany. Due to his working environment, he came into
contact with important political figures in the various countries in which he operated.
Thereby, Nogara gains an important diplomatic and financial role. In 1912 he will
participate in the negotiations for the peace Treaty between Italy and the Ottoman
Empire. In 1918, at the end of WWI, he joined the economic and financial commission of
the peace Treaty with the former Austro-Hungarian empire. And in 1920, in Berlin, he
worked on industrial policies within the commissions called on implementing an
economic plan through which Germany, following the Treaty of Versailles, will have to
pay war damages. With Giuseppe Volpi, a mason and then fascist, he founded in Istanbul
a branch of Banca Commerciale Italiana, of which he became an adviser and the Italian
government considered him for that a trusted contact for all the issues that may have
arose in the East. These stints will gradually shift him closer to the political and financial

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matters, until when in 1929, his friend Achille Ratti, who has been for seven years Pope
Pius XI, called him to the Vatican to manage a delicate matter. He was appointed to
direct the Special Administration of the Holy See, with the title of delegate and with the
function of managing the capital paid by Italy to the Vatican State, following the Lateran
Pacts. Nogara was chosen by the Pope due to his strong catholic beliefs and his well
established reputation with the Italian government. However, Nogara would accept the
task only under two fundamental conditions. The first one is that his investments will
be free of any doctrinal and religious regard. The second condition is more like an
extension of the first whereby the freedom involves also the liberty to invest without any
geographical constraint.
Nogara has invested in every sector considered essential for the Italian industrial
power, having a large influence in the decision making of the Pope to the point that the
rule of the two thirds was broken in order to move leverage more money increasing the
return on investment.
The bank became thereafter a sort of investment bank where religious works
restoration money was reduced to increase the amount Nogara could manage. The
institution was under the influence of the Pope, who largely listened to Nogara’s advices.
The independence from the Pope of the Institute comes with the death of Pius XI
(Milanese) and the election of Pius XII (Roman), who will establish that the organization
should not respond to the Papal figure but to a Commission of Cardinals guided by the
Secretary of State.
4.1.1 Raffaele Quadrani

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He is a young accountant recommended to B. Nogara by his brother due to his
excellent knowledge of English and French, thanks to work experience in London and
Paris.
4.2 Second President of the IOR Board: Massimo Spada
He was a stockbroker whose grandfather worked as a director for the Bank of Italy.
Spada has chaired and sat on the board of a big proportion of the holdings that Nogara
purchased. As of the late 1960s, he was vice-president of the Banco di Roma (one of Italy’s
largest banks), and sat on the board of its Swiss subsidiary.
Furthermore, he boarded Italy’s biggest domestic gas company, Società Italiana
per il Gas (37,412 million liras); presided the Trieste-based Riunione Adriatica di Sicurtà
(RAS) insurance company (4.320 billion liras), was also vice president and managing
director of the L’Assicuratrice Italiana. Also vice president of both the Unione Subalpina
di Assicurazioni (which in 1962 will be controlled by RAS) and of the Lavoro e Sicurtà
(750 million liras); Shell Italiana, the Italian subsidiary of Royal Dutch Shell (129 billion
liras invested in Italy); vice president of the Istituto Bancario Italiano (10 billion liras)
and the Credito Commerciale di Cremona (2 billion liras); board member of the Banca
Privata Finanziaria (which became part of Banco di Roma in 1973); board member of the
huge financial holding companies, Società Meridionale Finanziaria (122 billion liras,
privatized in 1989) and the Istituto Centrale Finanziario (150 million liras); vice
president of the Finanziaria Industriale e Commerciale; president of the Banca Cattolica
del Veneto (3 billion liras); board of directors of FINSIDER (founded in 1937 which
became known for acquiring ILVA from the a bank control), a state-controlled holding
company (195 billion liras), which is part of IRI, the Istituto per la Ricostruzione
Industriale, formed during the Fascist regime, which constituted the country’s largest
cartel and controlled the biggest shipyards; the Italia shipping line; Alitalia airlines; Alfa

27

Romeo; and the entire telephone system. FINSIDER produced at the time over 90% of
Italy’s steel and was the backbone of IRI. Spada became also a board member or executive
of dozens more banks, insurance, and industrial companies. In 1963 he was appointed
Privy Chamberlain of Sword and Cape, one of the highest of all Vatican titles, one also
held by his brother Filippo.
4.2.1 Henry De Maillardoz
He was a Geneva-based Credit Suisse banker and oversaw the bank’s industrial
portfolio. He has been Nogara’s trusted foreign contacts since 1925 when he was
responsible, using CS network, to arrange a consolidation of a portion of the Church’s
gold reserves in Europe. His appointment, together with the employment of a few other
Swiss bankers, made cardinal Domenico Tardini, who was at the time Secretary of State
(1958-1961), dubious on a possible prohibited financial speculation. He left in 1967 as
the chief layman of the IOR, and Mennini thereafter replaced him.
4.2.2 Luigi Mennini
Mennini is a father of fourteen children, with an extensive banking experience
that made Nogara interested in hiring him to the board of the IOR. He served
subsequently as a director at Banca Unione (linked to Michele Sindona investments)
which led to his arrest in 1981 for illegal currency trading. He succeded Henry De
Maillardoz in the presidency of the IOR.
4.2.3 Pellegrino de Strobel
He is the IOR’s chief internal accountant and also a director of jointly owned
Geneva bank by the IOR and Sindona. He opposed resistance to the appointment of the
archbishop Paul Casimir Marcinkus by Pope Paul I to president of the IOR.

28

4.3 Third President of the IOR Board: Arch. Paul C. Marcinkus
He was an American priest who organized trips for both Pope Paul VI and John
Paul II. Although, he was a follower of the P2 lodge (since 1967), going against what was
a public condemnation of the Catholic Church and lacking completely the expertise and
experience in finance, nonetheless in 1971 he was made President of the IOR until 1989.
At the same time, he was chief administrator working with Michele Sindona, a successful
banker and also a member of the P2 freemasonry. Under his guidance, the IOR has lost
money by engaging the institute in fraudulent activities and investments which had
eventually failed. It is not clear until today whether the Archbishop played a part in this
or not, as the Italian court does not have any jurisdiction in ruling over him due to the
1929 Lateran Pacts accordance.
4.4 Fourth President of the IOR Board: Angelo Caloia
Caloia prior to his succession to the ousted archbishop Marcinkus, was an
economics professor at the Università Cattolica del Sacro Cuore in Milan and the Chief
Executive Officer of Mediocredito Lombardo, a merchant bank. He was also one of the
founders of the Group for Culture, Ethics and Finance also known collectively as the
“finanza Bianca” (or white finance), due to their objective in creating an organization of
Catholic managed banks that made profits without surrendering their Christian
identity. He advocated for transparency, which came only in 2013 due to international
political pressure and following morally debatable scandals.
Under his guidance, the IOR have for the first time equipped themselves with a
supervisory panel composed of laymen. Caloia also appointed Giovanni Bodio, a high
executive at Mediocredito Lombardo to serve as the first IOR’s lay director since Henri
de Maillardoz in the 1960s.

29

Furthermore, the appointment marked a change in terms of relationship with the
Pope, to the detriment of the powerful Roman Curia.
4.4.1 Philippe De Weck
Philippe de Weck obtained a law degree from the University of Fribourg. He
worked from 1949 to 1954, following the takeover by UBS, in the private bank Banque
Fribourg Weck Aeby & Cie. In UBS, he quickly moves up the ranks and in 1956 he is
head of UBS Geneva and from 1966 to 1976 he was the President of the General
Directorate. From 1976 to 1980 he held the Council Presidency of Directors at UBS. He
was also at the centre of what the French called “the sniffer planes affair”, which
swindled the French government out of at least $60 million during the 1980s on an aerial
device which could “smell” oil and minerals and nuclear submarines, in fact he was
president of Fisalma, the company that commercialized this funny sniffer.
De Weck was a member of the board at Nestlé from 1973 to 1991 and after its
withdrawal from the chairmanship of UBS, he headed the Societé Générale de
Surveillance for 10 years (from 1980 to 1990). Between 1982 and 1985, he was part of
the group of experts who investigated the IOR’s finances following the Ambrosiano
scandal. In 1989, he was then appointed vice president of the IOR, a position he kept for
the following 8 years.
4.4.2 Jose Angel Sanchez Asiain
Jose Asiain obtained a law degree from the University of Deusto and subsequently
a PhD in economics in 1958 from the Central University of Madrid. He began his career
working at the Bank of Bilbao and joined the Ministry of Industry shortly after as
Technical Secretary General. In 1968, he became a professor at the University of Bilbao,

30

leaving the job at the Ministry and resuming his stint at the Banco de Bilbao until he
was appointed CEO and held the position of Chairman of the board of Directors until
1988 when the bank merged with Banco de Vizcaya, which resulted in a new entity,
namely Banco Bilbao Vizcaya, that he headed until 1990. He has been part of the
management teams of different companies, among which worth mentioning are Altos
Hornos de Vizcaya, Iberduero, Industrial Credit Bank and United International Bank.
4.4.3 Theodor Pietzcker
He was a Deutsche Bank director and one of the first German board member.
Later, also Ronaldo Schmitz will list Deutsche Bank as his main experience.
4.4.4 Thomas Macioce
Thomas Macioce was born as a second generation Italian in East Harlem and won
a scholarship to Columbia College before proceeding to the Columbia Law School. He was
considered very active in Roman Catholic Groups. Macioce worked for 4 years in the legal
department of the Flintkote Company, 6 years as president of Bloomsburg Mills and 3
years as president of the factoring concern of L. F Dommerich & Company, which gave
him some finance background as the firm was specialized in purchasing accounts
receivable from companies that wanted immediate cash.
He was a trustee of St. Johns’ and Adelphi Universities and a former trustee of
Columbia which conferred him the most distinguished award in 1984, the Alexander
Hamilton Medal. He joined Allied Stores Corporation in 1960 as a vice president, when
the company’s earnings outlook was spiritless due to many failed acquisitions that
produced unprofitable stores. He was credited with turning over the firm by selling
underperforming stores and beginning around the mid 1970’s (when he was already
president) acquiring department stores and specialty chains that had a potential

31

profitable marketability. He soon became CEO in 1972 and chairman in 1981. He served
as head until 1987 when one of the largest department store chain in the United States
had been a target of a hostile takeover by the Canadian Campeau Corporation.
Subsequently, he became a senior partner at the Manhattan law firm Shea &
Gould (which dissolved in 1994). As a Roman catholic, Macioce was appointed by the
Vatican to the international board of lay directors tasked to clean up the scandal-ridden
IOR. Unfortunately, his stay was not long, in fact he died the following year of leukemia.
4.4.5 Robert Studer
Robert Studer started his career at Union Bank of Switzerland in 1957 and was
the head of finance from 1980 to 1988, CEO from 1988 to 1996 and rose to become
president of the UBS executive board in 1991 and chairman of the board of directors 5
years later. He was chairman until the reverse takeover of UBS by Swiss Bank
Corporation in 1998.
4.4.6 Manuel Soto Serrano
Serrano served as Managing Partner and Manager for Arthur Andersen. He was
responsible for EMEAI from 1980 to 1998. In 1960, with the start of Arthur Andersen's
activities in Spain, he started his career at its offices in Madrid, and was appointed as a
Partner at Arthur Andersen in 1970. He then moved on as Chairman of Advisory Council
at Mercapital, S.L. since 1999. He served as Chairman of the Global Board and Member
of the Board of Directors at Arthur Andersen LLP from 1987 to 1989, as the Vice
Chairman of Mercapital Servicios Financieros, S.L, as the Fourth Vice Chairman of
Banco Santander, S.A. until April 29, 2013 and as a Non-Executive Vice Chairman and
Director of Indra Sistemas SA until June 2011. He has been a Director at Cartera
Industrial Rea, S.A. since March 13, 2008 and at Campofrío Alimentación, S.A. He served

32

as a Director of Santander Holdings USA, Inc. until June 2015. He served as a Non-
Executive Member of Board of Directors at Banco Santander, S.A. from April 17, 1999 to
April 29, 2013.
4.5 Fifth President of the IOR Board: Ettore Gotti Tedeschi
Ettore Gotti Tedeschi was a conservative economist and chief of Italian operations
for Spain’s Banco Santander. For the first 12 years of his professional life he dealt with
industrial and financial strategy (working for Metra-Sema in Paris from 1973 to 1980
and for McKinsey in Milan and London from 1980 to 1984). Only from 1985 he would
start to work in the financial industry. In fact, he worked as an investment banker for
Procomin of Imi-Bnl, to then work for the merchant bank Sige, also belonging to the Imi
group, where he met Gianmario Roverano, with whom he found Akros. In 1990, through
Akros, he worked on the initial public offer of Parmalat. He subsequently served in the
board of administration of Parmalat until 1991.
In 1992, he left Akros to found the Italian branch of Banco Santander. He would
acquire Banca Antonveneta in order to sell it to Montepaschi di Siena. After his
appointment to the IOR, he began implementing important reforms in terms of
transparency. However, in September 2010 he was caught in an investigation for alleged
violation of anti-money laundering regulations.
Thereafter, Gotti Tedeschi received a vote of no confidence (unanimity) on 24th
May 2012 and immediately removed as acting President with the following motivation:
“for not having operated various important functions for the Office”. On 8th January 2015,
he made a public statement where he has been ousted because of the decision of
proposing a plan to completely change the governance of the organization.

33

4.5.1 Carl Anderson
Carl Anderson was a professor of family law at the Pontifical John Paul II Institute
for Studies on Marriage and Family from 1983 to 1998.
Anderson has served during the Reagan administration in various positions within the
Executive Office of the President of the United States. He also served as a member of the
U.S. Commission on Civil Rights.
4.5.2 Giovanni De Censi
Giovanni De Censi would exit the IOR board at the end of 2010, officially due to
“health reasons” but the reality was that he entered in a collision with the Cardinal
Commission of Vigilance, a body that was inquiring into the investigations made by
Banca d’Italia on the “Credito Artigiano case”. The bank under scrutiny was 70% owned
by Credito Valtellinese, which was conveniently headed by Giovanni Censi himself.
4.6 Sixth President of the IOR Board: Ronaldo Hermann
Schmitz
Ronaldo Hermann Schmitz graduated at Insead in Fontainebleau where he earned
an MBA. After starting his career at Deutsche Trust Company in 1965 Schmitz moved 2
years later to BASF, the largest chemical producer in the world, in Ludwigshafen.
Between 1974 and 1977 he was Managing Director of BASF Espanola in Spain. In 1980
he served in the board of BASF, responsible for the areas Chemicals, Oil & Gas and for
the purchase of raw materials. From 1985 he took charge of the Finance department. In
1990, he moved from BASF to Deutsche Bank where he was responsible for Global
Investment Banking as well as for North America until his retirement in 2000. In 1999,
the takeover of the US Banker Trust catapulted the German bank to the world’s best.
From 1997 to 2009 he was a member of the Group board of GlaxoSmithKline. Between

34

1992 and 2009, Schmitz was on the board of the US company Rohm and Haas. And from
1994 to 2000 Schmitz was vice-president of the Board of Bertelsmann. From 1993 to 1998
he was also the chairman of the now defunct Metallgesellschaft (MG), which bankrupted
after a losing trade on oil futures. Since 2005 Schmitz is a member of the Supervisory
board of Sick, the sensor manufacturer and of the US industrial company Cabot
Corporation.
4.6.1 Antonio Maria Marocco
Antonio Maria Marocco, during his appointment, was a member of the board at
Unicredit, (one of the bank which underwent investigations for the Vatican financial
scandals), Reale immobili, Editrice La Stampa, and prior to the appointment he also sat
on the board of Reale Mutua di Assicurazioni and Exor.
4.7 Seventh President of the IOR Board: Ernst von Freyberg
Von Freyberg has worked as a financial analyst for the investment firm Three
Cities Research in New York and London. In 1991, he co-founded the financial company
Close Brothers GmBH, where he served as an administrative director until December
2012. In 2009, the company was acquired by Daiwa Corporate Advisory GmbH.
In 2012, he became President at the Blom+Voss Group, a leading German shipbuilder.
4.8 Eighth President of the IOR Board: J. B. D. de Franssu
Jean-Baptiste Douville de Franssu has worked firstly in alla Caisse des Dépots et
Consignations, and subsequently at the European branch of Invesco. From 2009 to 2011
he was President of the European Fund and Asset Management Association (EFAMA)
and next since 2012 he was an independent director at Carmignac Gestion. He was also
the Chief Executive Officer of Incipit, an advisory firm on mergers and acquisitions

35

headquartered in Bruxelles.
4.8.1 Mary Ann Glendon
Glendon was appointed by President Bush to the President's Council on Bioethics.
She was then nominated as United States Ambassador to the Holy See on November 5,
2007 and resigned her office effective January 19, 2009.
4.8.2 Michael Hintze
Sir Michael Hintze is the Founder and Chief Executive Officer of CQS (UK) LLP.
Sir Hintze founded the CQS Management Limited in 1999. Prior to this, Sir Hintze held
senior management positions at Crédit Suisse First Boston, Goldman Sachs, and
Salomon Brothers. He serves as a Director of Hedge Fund Standards Board Ltd. Sir
Hintze served as a Director of Baer Capital Partners Ltd.
4.8.3 Mauricio Larrain
Mr. Mauricio Larraín Garcés serves as the President of Banco Santander-Chile.
Mr. Garces started working at Santander Chile in 1989. Previous to that, he served as a
Intendente of the Superintendency of Banks, Manager of External Debt at the Banco
Central de Chile and a Senior Finance Specialist at the World Bank in Washington. He
served as a Director of Santiago Stock Exchange since August 19, 2002.
4.8.4 Clemens Börsig
Dr. Börsig served as the Chief Financial Officer and Chief Risk Officer of Deutsche
Bank AG since 1999 and served as its Financial Director. From 1997 to 1999, he served
for RWE AG in Essen, Germany as Chief Financial Officer and Member of the
Management Board. He served at Robert Bosch GmbH in Stuttgart, Germany, where he
joined in 1985 as the Head of Corporate Planning and Controlling. Since 1990, Dr. Börsig

36

served on the Management Board of Bosch. From 1977 to 1985, he served a number of
positions at Mannesmann Group in Düsseldorf, Germany, including Head of Corporate
Planning at Mannesmann-Kienzle GmbH and Chief Financial and Administrative
Officer at Mannesmann-Tally. He served as an Executive at Commerzbank AG.
He has been a Member of the Supervisory Board at Bayer AG since April 27, 2007,
Emerson Electric Co. since February 2009, The Linde Group since June 30, 2006,
Daimler AG since April 4, 2007. He served as a Member of Supervisory Board at Bayer
Pharma AG. He served as a Member of Supervisory Board at Deutsche Lufthansa
Aktiengesellschaft from July 1, 2006 to April 29, 2008. He served as a Member of the
Supervisory Board of Heidelberger Druckmaschinen AG until March 31, 2007. He served
as a Member of Supervisory Board at Eurohypo from September 30, 2004 to May 25,
2005. He is a Trustee of International Financial Reporting Standards Foundation.
4.8.5 Carlo Salvatori
Carlo Salvatori started his professional career at Banca Nazionale del Lavoro.
From 1980 to 1987 he served as Vice President at Banca Emiliana, Cassa di Risparmio
del Lavoro and later on also as Director General at BNL. In 1990, he was appointed as
Director General in Banco Ambrosiano Veneto, becoming eventually Chief Executive
Officer. In 1996 he served as a member of the board of directors in Cariplo. Thereafter,
the merger between Cariplo and Banco Ambrosiano Veneto would result in a new entity
which will later become known as Banca Intesa, of which he was the first Chief Executive
Office from January 1998 to November 2000. He was elected to President in Unicredit
on 6th May 2001 until January 2006. Furthermore, on the same period he also served as
Vice-President at Mediobanca. Since 2006 to April 2010 he served as Chief Executive
Officer at Unipol Gruppo Finanziario. In April 2010 he assumes the Presidency at Lazard
Italy, a position he covered together with the Presidency of Banca Monte Parma.
Salvatori has served in numerous board of directors, including API and SeaChange

37

International.
5. Empirical Results
5.1 Data on asset prices of firms connected to members of the
board
In this section, we will build a table to simplify our analysis on the asset prices
change as a new Pope is elected. However, the premise is that the analysis will not be
exhaustive in explaining completely the potential benefits that an average firm
connected to the IOR can redeem, due to incomplete stock prices coverage of the
databases. Therefore, the effects will strictly concern the events following the year 1978,
that is from the end of the third Papacy delving into the fourth included.
Table 2. Temporal Succession of Popes
N°- Papal name Start date of the
Papacy
End date of the
Papacy
Vacancy
period
(days)
1 Pius XII 2 March 1939 9 October 1958 19
2 S. John XXIII 28 October 1958 3 June 1963 18
3 Paul VI 21 June 1963 6 August 1978 20
4 John Paul I 26 August 1978 28 September 1978 18
5 John Paul II 16 October 1978 2 April 2005 17
6 Benedict XVI 19 April 2005 28 February 2013 13
7 Francis 13 March 2013 Present -

38

To expand the level of detail and the potential differences, the analysis will
distinguish directly connected firms from indirectly connected firms, which are namely
the companies to which the members were tied prior to their appointment at the Vatican
Bank. Furthermore, when the exact dates are given, in order to find a possible effect on
the asset prices of the connected firms, the analysis will span over the period of the
appointment of the board member. In particular, between the Seventh and the Third
Papacy, the dual condition of non “overlapping” member with the Pope’s death and the
given exact date of their tenure at the IOR, is true for only two members: Thomas Macioce
and Ettore Gotti Tedeschi.
However, Macioce’s Allied Stores was a private company which was later
acquired around his appointment to the IOR by the publicly traded Canadian Campeau
Corporation. The company failed shortly thereafter.
We therefore conduct for Ettore G. Tedeschi the analysis on the following firms
considering the period between 23rd September 2009 and 24th May 2012, which we can
see as a valid forecast for our conclusions.
Name SCHLUMBERGER BANCO POPOLARE PARMALAT INTESA SANPAOLO
CURRENCY U$ E E E
13/09/09 60,39 25,8996 1,7504 2,8394
13/10/09 64,15 27,2338 1,8389 2,898
13/11/09 65,52 24,4869 1,9278 2,8723
13/12/09 61,38 20,8374 1,8833 2,8254
13/01/10 70,85 21,9754 1,807 2,9824
13/02/10 64,3 17,5509 1,6727 2,469
13/03/10 64,54 20,5464 1,8428 2,6706
13/04/10 65,51 21,2999 2,0534 2,6261
13/05/10 66,94 18,0418 1,8766 2,1548
13/06/10 59,48 18,1028 1,9317 2,0422
13/07/10 58,62 19,6708 1,894 2,3306
13/08/10 58,76 19,1006 1,7761 2,2157
13/09/10 60,15 19,8948 1,9046 2,3025
13/10/10 64,62 17,5836 1,8495 2,3775

39

13/11/10 74,11 14,916 1,9007 2,1923
13/12/10 82,43 14,3357 1,923 2,0586
13/01/11 84,6 14,0506 2,0172 2,054
13/02/11 90,37 14,6056 2,1718 2,2978
13/03/11 86,24 13,1226 2,2728 2,1834
13/04/11 85,79 11,9878 2,2206 2,1102
13/05/11 82,71 10,8755 2,5453 1,9264
13/06/11 82,7 9,0386 2,5028 1,761
13/07/11 87 7,932 2,265 1,642
13/08/11 77,99 6,9208 1,6031 1,247
13/09/11 72,13 6,0332 1,5519 0,923
13/10/11 67,2 6,9096 1,5422 1,284
13/11/11 76,54 5,8254 1,5654 1,283
13/12/11 70,41 5,1822 1,376 1,207
13/01/12 67,99 5,1063 1,3045 1,24
13/02/12 78,03 7,7353 1,5403 1,491
13/03/12 74,77 9,2802 1,807 1,492
13/04/12 68,38 6,3029 1,6621 1,163
13/05/12 68,8 5,6175 1,6872 1,071
Return 13,93% -78,31% -3,61% -62,28%
Moreover, not all the connected firms are publicly traded, thus not allowing a
thorough identification of a potential interconnectedness between their performance
and relative member’s appointment to the board of Superintendence.
To simplify our analysis we will create a table of the affiliated firms for every
Papacy and compute thereafter the average return of the stocks representing them.
The calculations will be operated assuming a portfolio of the available stocks relevant
to our analysis at the time when the Papacy changes. Thus, the average return for each
stock performance over the studied period will be the discriminating factor in the
possible influence of the lay board member’s on asset prices of the connected firms.
It is fundamental to learn that for the purpose of the analysis not all members’
tenure would overlap with a Pope’s death which is evidently discernable by the fact
that we have more Presidencies than Papacies. Therefore, we will consider for the stock

40

return analysis the firms connected between the Third and the Sixth Papacy. In
particular, the firms involved are the following:
5.1.1 Third and Fourth Papacy firms
Directly connected (Third): UBS GROUP
Frequency D
Name UBS GROUP
CURRENCY SF
28/07/78 5,718 04/08/78 5,769
31/07/78 5,738 07/08/78 5,769
01/08/78 5,738 08/08/78 5,892
02/08/78 5,707 09/08/78 5,892
03/08/78 5,789 10/08/78 5,974
04/08/78 5,769 11/08/78 5,943
Return 0,89% 3,02%
Directly connected (Fourth): UBS GROUP
Frequency D
Name UBS GROUP
CURRENCY SF
21/09/78 5,974 28/09/78 5,892
22/09/78 5,943 29/09/78 5,923
25/09/78 5,923 02/10/78 6,025
26/09/78 5,892 03/10/78 5,953
27/09/78 5,892 04/10/78 5,923
28/09/78 5,892 05/10/78 5,964
Return -1,37% 1,22%
5.1.2 Fifth Papacy firms
Directly connected: Mediocredito Lombardo (which became Intesa Sanpaolo); Deutsche
Bank; UBS GROUP

41

Frequency D
Name
INTESA
SANPAOLO
DEUTSCHE
BANK
UBS
GROUP
CURRENCY E E SF
25/03/05 3,6335 58,075 44,487
28/03/05 3,6335 58,075 44,487
29/03/05 3,594 58,187 44,797
30/03/05 3,5753 58,161 44,487
31/03/05 3,6498 57,693 44,708
01/04/05 3,6498 58,361 45,107
Return 0,45% 0,49% 1,39%
Avg
return 0,78%
Indirectly connected: Banco Bilbao Vizcaya; Alto Hornos de Vizcaya (acquired by
Arcelormittal)
5.1.3 Sixth Papacy firms
Directly connected: Cabot Corporation; Daiwa Corporate Advisory; Unicredit; Editrice
La Stampa (owned by FCA group)
Frequency D
Name CABOT
DAIWA
SECURITIES
GROUP THYSSENKRUPP UNICREDIT
FIAT
CHRYSLER
AUTOS.
CURRENCY U$ Y E E E
21/02/13 36,54 540 17,11 3,74 2,70
22/02/13 37,32 551 17,28 3,79 2,72
25/02/13 36,04 571 17,40 3,87 2,71
26/02/13 36,32 569 17,15 3,54 2,62
27/02/13 36,76 563 17,30 3,61 2,69
Frequency D
Name
INTESA
SANPAOLO
DEUTSCHE
BANK
UBS
GROUP
CURRENCY E E SF
25/03/05 3,6498 58,361 45,107
28/03/05 3,6126 58,005 44,708
29/03/05 3,6126 58,213 44,753
30/03/05 3,6498 58,266 45,018
31/03/05 3,6498 58,474 45,505
01/04/05 3,6638 58,69 45,372
Return 0,38% 0,56% 0,59%
Avg
return 0,51%
Frequency D
Name BBV.ARGENTARIA ARCELORMITTAL
CURRENCY E E
25/03/05 9,85 19,88
28/03/05 9,85 19,88
29/03/05 9,87 18,36
30/03/05 9,82 17,22
31/03/05 9,87 18,08
01/04/05 9,96 18,86
Return 1,20% -5,15%
Avg return -1,98%
Frequency D
Name BBV.ARGENTARIA ARCELORMITTAL
CURRENCY E E
01/04/05 9,96 18,86
04/04/05 9,88 18,26
05/04/05 9,97 18,14
06/04/05 10,09 18,16
07/04/05 10,07 17,98
08/04/05 10,09 17,99
Return 1,26% -4,57%
Avg return -1,65%

42

28/02/13 36,78 573 17,25 3,60 2,69
Return 0,66% 6,11% 0,79% -3,85% -0,29%
Avg
return 0,68%
Indirectly connected: BASF; Deutsche Bank; Glaxosmithkline; Bertelsmann; Exor;
Banco Santander; Indra Sistemas SA, Grupo Barceló, Cartera Industrial Rea,
Campofrío Alimentación.
Frequency D
Name BASF DEUTSCHE BANK GLAXOSMITHKLINE BERTELSMANN GSH.
CURRENCY E E £ E
21/02/13 72,60 33,20 1465,00 253,30
22/02/13 74,50 33,75 1479,00 253,20
25/02/13 73,90 33,60 1475,50 256,80
26/02/13 72,42 32,96 1458,00 255,00
27/02/13 72,40 33,30 1454,00 254,15
28/02/13 72,50 33,63 1456,00 254,30
Return -0,14% 1,29% -0,61% 0,39%
BANCO
SANTANDER
INDRA
SISTEMAS
BEFESA MEDIO AMBIENTE
DEAD - 26/08/11
CARTERA
INDUSTRIAL REA
CAMPOFRIO
FOOD GP.
EXOR
ORD
E E E E E E
4,57 9,01 23,22 2,08 4,30 21,38
4,68 9,44 23,22 2,08 4,19 21,73
4,72 9,52 23,22 2,08 4,25 21,75
4,50 9,33 23,22 2,08 4,25 20,83
4,62 9,80 23,22 2,08 4,74 21,26
Frequency D
Name CABOT
DAIWA
SECURITIES
GROUP
THYSSENKR
UPP
UNICRED
IT
FIAT
CHRYSL
ER
AUTOS.
CURREN
CY U$ Y E E E
28/02/13 36,78 573 17,25 3,60 2,69
01/03/13 36,38 590 16,82 3,53 2,63
04/03/13 36,10 606 16,44 3,44 2,56
05/03/13 36,51 594 16,81 3,56 2,71
06/03/13 36,93 602 17,13 3,57 2,72
07/03/13 37,29 628 17,19 3,55 2,74
Return 1,39% 9,60% -0,34% -1,23% 2,04%
Avg
return 2,29%

43

4,65 9,57 23,22 2,08 4,27 21,46
1,77% 6,23% 0,00% 0,00% -0,70% 0,37%
Avg
return 0,86%
Frequency D
Name BASF DEUTSCHE BANK GLAXOSMITHKLINE BERTELSMANN GSH.
CURRENCY E E £ E
28/02/13 72,50 33,63 1456,00 254,30
01/03/13 71,90 32,00 1466,00 257,00
04/03/13 71,76 31,72 1460,50 256,50
05/03/13 73,05 32,52 1474,00 255,15
06/03/13 73,67 32,38 1473,00 256,00
07/03/13 73,40 32,42 1484,00 256,40
Return 1,24% -3,60% 1,92% 0,83%
BANCO
SANTANDER
INDRA
SISTEMAS
BEFESA MEDIO AMBIENTE
DEAD - 26/08/11
CARTERA
INDUSTRIAL REA
CAMPOFRIO
FOOD GP.
EXOR
ORD
E E E E E E
4,65 9,57 23,22 2,08 4,27 21,46
4,59 9,24 23,22 2,08 4,42 21,11
4,61 8,93 23,22 2,08 4,39 21,08
4,70 9,27 23,22 2,08 4,30 21,59
4,63 9,40 23,22 2,08 4,21 21,63
4,64 9,11 23,22 2,08 4,35 21,71
-0,19% -4,82% 0,00% 0,00% 1,87% 1,16%
Avg
return -0,16%
5.1.4 Seventh Papacy firms – Analysis for Appointment
The analysis for appointment consists of valuating the entire stock performance during
the tenure of IOR board member.
The firms involved are as follows: Invesco; Credit Suisse; Goldman Sachs; Banco
Santander Chile; Deutsche Bank, Rwe, Bruder Mannesmann, Linde Group, Daimler,

44

Emerson, Fraport, Lufthansa, Heidelberger Druckmaschinen, Intesa Sanpaolo,
Unicredit, Mediobanca, Unipol Gruppo Finanziario, Lazard, Seachange Intl.
Analysis for appointment
Frequency 6M
Name
DEUTSCHE
BANK RWE
BRUDER
MANNESMANN COMMERZBANK LINDE
CURRENCY E E E E E
09/09/14 27,01 31,212 0,715 12,49 152,612
09/02/15 26,803 22,734 0,486 11,085 173,426
09/07/15 27,285 19,414 0,294 11,076 172,271
09/12/15 22,149 10,968 0,712 9,469 132,46
09/05/16 14,7 11,7 0,88 7,045 127,097
Return -45,58% -62,51% 23,08% -43,59% -16,72%
DAIMLER
EMERSON
ELECTRIC FRAPORT
DEUTSCHE
LUFTHANSA
HEIDELBERGER (XET)
DRUCKMASCHINEN
BANCO
SANTANDER
CHILE
E U$ E E E CE
64,49 65,11 52,62 13,63 2,358 35,15
80,501 57,35 53,444 13,38 2,01 31,52
81,097 53,76 57,147 11,85 2,027 32,31
76,492 47,14 57,266 13,39 2,304 31,27
59,741 52,62 50,458 12,524 1,991 31,53
-7,36% -19,18% -4,11% -8,11% -15,56% -10,30%
Avg return -19,97%
Frequency 6M
Name INVESCO
CREDIT
SUISSE GOLDMAN SACHS
CURRENCY U$
02/07/14 38,21 25,008 166,89
02/12/14 40,5 25,124 190,19
02/05/15 41,61 24,104 197,53
02/10/15 31,55 22,947 177,01
02/03/16 28,22 14,81 154,2
02/08/16 28,27 10,46 156,06
Return -26,01% -58,17% -6,49%
Avg
return -30,23%

45

Name
INTESA
SANPAOLO UNICREDIT
MEDIOBANCA
BC.FIN
UNIPOL
GRUPPO
FINANZIARI
LAZARD
'A'
SEACHANGE
INTL.
CURRENCY E E E E U$ U$
09/09/14 2,44 5,9191 7,1 4,21 54,28 7,88
09/02/15 2,49 5,0829 7,495 4,49 49,96 7,18
09/07/15 3,21 5,6446 8,71 4,35 52,76 6,95
09/12/15 3,09 4,9641 8,63 4,592 44,81 6,75
09/05/16 2,24 2,992 6,245 3,462 33,5 3,41
Return -8,12% -49,45% -12,04% -17,77% -38,28% -56,73%
Avg
return -30,40%
5.2 Asset prices analysis around Papacy change
From the collected data, we do not have any evidence to sustain our initial
hypothesis of a possibility where IOR’s lay board members would have any beneficial
effect on average on the overall performance of each analyzed stock. It is clear from
Table 2. Temporal Succession of Popes, that the vacancy period has been shrinking
since IOR’s inception signaling an improved political openness within the Cardinals.
In light of this observation, from the Third and the fourth Papacy, there can be
detected a slight improvement on UBS Group, in both Papacies, as the first board
Presidencies lasted for a sufficiently long period. UBS Group would appreciate by
0,89% just before the Pope’s death and further improve its performance by 3,02% as the
new Pope got elected. This is true also for the fourth Papacy.
The fifth Papacy can be considered to be a turning point, for what concerns the
indirectly connected firms in particular Banco Bilbao Vizcaya and Alto Hornos de
Vizcaya, as the latter made heavy losses in those two weeks. In fact, Arcelomittal’s
stocks compensated negatively what Banco Bilbao Vizcaya has earned. As for the
directly connected firms, or the banks, are experiencing a rather stable situation,
returning in average 0,51% around the election of the new Pope. The low volatility may

46

be explained by the relative big size as compared to other firms and their commitment
of creating an efficient financial system.
The sixth Papacy was exposed to a positive effect, however the analysis is
skewed (a possible outlier) by Daiwa Securities Group, since the others are performing
in a low volatility environment.
The Seventh Papacy was analyzed considering all the firms connected to the
current members and see how they performed during their tenure so far. The returns
are very negative reaching a maximum of -62,51% with an average between 20% to 30
%. This may reflect the lackluster environment in the financial industry of the last few
years and not an effect provoked by any visible connection in terms of value
distribution to stakeholders.
In conclusion, the presence of positive returns when they are present are
comparable to the annual risk free rates, where as the negative results are seriously
damaging the firms’ value on average by at least half. Therefore, it is possible that the
value creation takes place in private companies where the lack of transparency may
become the competitive advantage in order to perform the connective business
opportunities.

47

Bibliography & Webography
1. http://www.ior.va/content/dam/ior/documenti/media/documenti/IOR-
Statutes_English%20translation.pdf [Accessed 15 July 2016]
2. http://www.lastampa.it/2016/05/12/vaticaninsider/eng/the-vatican/ior-sees-drop-
in-profits-as-a-result-of-economic-crisis-but-also-greater-transparency-and-lower-
operating-expenses-c2vwOKZRqFOTGs1WOj1U5L/pagina.html [Accessed 15
July 2016]
3. http://ilnazionale.net/cultura/lo-ior-e-gli-organi-di-governance-la-commissione-
cardinalizia/ [Accessed 15 July 2016]
4. https://www.quora.com/Why-is-the-Vatican-its-own-country [Accessed 15 July
2016]
5. https://www.theguardian.com/world/2015/aug/13/can-pope-francis-clean-up-gods-
bank [Accessed 15 July 2016]
6. https://www.theguardian.com/world/2015/apr/01/vatican-bank-agrees-tax-treaty-
italy [Accessed 16 July 2016]
7. http://www.advisoronline.it/asset-manager/societa-di-gestione-del-
risparmio/27514-ior-nasce-vatican-asset-management.action [Accessed 16 July
2016]
8. http://www.lastampa.it/2015/04/22/vaticaninsider/ita/vaticano/un-asset-
management-per-i-beni-della-santa-sede-
LK6T6rIa3Slcn9cHymFP8O/pagina.html [Accessed 16 July 2016]
9. http://www.lastampa.it/2015/01/22/esteri/vatican-insider/it/ior-la-commissione-
cardinalizia-ora-composta-da-sei-membri-
aoxnUtlhpjRU0A671yu55N/pagina.html [Accessed 16 July 2016]
10. http://www.wikiwand.com/it/Istituto_per_le_opere_di_religione [Accessed 16 July
2016]

48

11. http://www.economist.com/node/21560536 [Accessed 16 July 2016]
For the biographies:
12. https://it.wikipedia.org/ [Accessed 17 July 2016]
13. http://www.bloomberg.com/ [Accessed 17 July 2016]
14. Valli, A. (2013). Il forziere dei papi. Milano: Àncora.
15. Posner, G. (n.d.). God's bankers.
Database:
16. Thomson Reuters Datastream

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