Morning business news - July 10Thursday 10 July 2014 10.55
The entire senior management team of the Vatican bank is to be replaced as part of extensive reforms of the Catholic Church's central government. Pope Francis has sought to stamp out corruption and other abuses at the bank, which handles the Church's funds. French financier Jean-Baptiste de Franssu will take over as head of the bank from Ernst von Freyberg. The bank - officially known as the Institute for Religious Works - will also eventually give up its investment activities to focus on serving religious orders and charities.
Deborah Ball, the Wall Street Journal's Italy bureau chief, says that scandal has been swirling around the Vatican bank for decades. Initially established as a savings and loan bank for Catholic congregations around the world, she says it morphed in the 1970s and 1980s into a more complex structure, but one which failed to implement basic anti-money laundering controls and measures. As a result "funny money" was put in the bank from various groups and it was said that some of these funds came from organised crime and from some embassies in Rome who should not have had an account in the bank but did have some. But after several scandals, the bank authorities got very aggressive about standards and brought in outside consultants to do a massive cleanup, including the Promontory Financial Group, who went though each account at the bank one by one. This resulted in the blocking of over 2,000 clients' accounts, while 3,000 "customer relationships" were also ended.
As part of the new reforms at the bank, it will now separate its investment business from its Church payments work to mark a return to a more simple bank, the journalist says. But the changes - as well as poor investments in hedge funds - have hurt the bank's profits and it reported profits of just €2.9m in 2013, down sharply from €86.6m in 2012.
MORNING BRIEFS - Builders merchanting and DIY group Grafton says overall trading conditions were favourable in the six months to June, as the recovery in the UK and Irish economies became more firmly established and gradually gained momentum. A statement this morning says its revenue for the half year reflected generally improved demand and there was strong growth in the first quarter because of better weather conditions compared to last year. Group revenue for the six months to 30 June 2014 increased by 11.3% to £1.015 billion, up from £912m last year.
*** Dale Farm - Northern Ireland's biggest dairy business - has revealed its profits before tax soared by almost a third to £6.1m in the year to the end of March. Its parent group - the United Dairy Farmers Coop - reported sales in of £293m, up 30%, in the year. The company processed record amounts of milk supplied by more than 1,600 local farmers, who also own the business. Group chief executive David Dobbin said the company's ambitious growth strategy was starting to pay off with its performance helped by strong international markets and the company's major investment in cheese and whey processing.
*** Aer Lingus has announced that Bernard Bot, previously at TNT Express, will succeed Andrew Macfarlane in the role of chief financial officer in September.
*** House builder Abbey has reported pre-tax profits of €24.1m for the year to the end of April, up from €11.3m the previous year, and said the outlook for the current year is encouraging. Abbey said its housebuilding operations completed 390 sales in the 12 month period - 353 in the UK, 22 in Ireland and 15 in the Czech Republic.