The director and deputy director of the Vatican bank have resigned.

The resignation follow a sweeping investivation of the bank over suspected corruption.

It comes three days after a senior Catholic cleric who held accounts at the bank was arrested in Italy for alleged corruption.

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

The 61-year-old and two others are suspected of trying to move 20m euros illegally.

The priest has been under investigation by Italian police for a series of suspicious transactions involving the recycling through the Vatican bank of a series of cheques described as church donations.

Last week, the Pope set up a commission of inquiry to investigate the bank, which has been plagued by allegations of money laundering for years.