Director and deputy of scandal-hit Vatican bank resign

The director and deputy director of the Vatican bank have resigned amid a sweeping probe of the scandal-hit institution, the Vatican said on Monday.

Paolo Cipriani and Massimo Tulli handed in their resignations "in the best interest of the institute and the Holy See", the Vatican said in a statement, three days after a senior Catholic cleric who held accounts at the bank was arrested in Italy for alleged corruption.

The shock resignation of top management came amid a probe into the Institute for Works of Religion (IOR), as the bank is known, carried out under the scrutiny of Pope Francis himself.

"Since 2010 the IOR and its management have been working hard to bring structures and processes in line with international standards for anti-money laundering," the bank's president Ernst von Freyberg was quoted as saying.

"While we are grateful for what has been achieved, it is clear today that we need new leadership to increase the pace of this transformation process," he added.

The Vatican said von Freyberg would "assume the functions of the General Director ad interim with immediate effect."

In a bid to tighten control of the bank's activities, the pope last week set up a special five-member commission, which is under orders to investigate the bank and report anything it uncovers directly to him.

On Friday, Italian police arrested senior cleric Nunzio Scarano, 61, on suspicion of money-laundering and fraud, for allegedly plotting to smuggle millions of euros into Italy.