it failure — it failure — The housing finance agency’s inability to implement a new banking information system has been characterised as a significant strategic breakdown by auditor-general Andreas Papaconstantinou. This audit raises serious concerns regarding the agency’s operational integrity and technological readiness.
It failure: Audit Findings Highlight Strategic Failures
In a special audit report released on Tuesday, Papaconstantinou pointed out that prolonged delays, inadequate oversight, and unlawful decisions have entrenched the agency’s dependence on external providers. This situation has imposed substantial costs on taxpayers and left the agency vulnerable from a technological standpoint.
Project Timeline and Financial Implications
Originally, the project was slated for completion by January 2021, yet five years later, the housing finance agency has failed to deliver the new system, despite spending millions of euros. The contract, valued at €10.2 million, was signed in January 2019, intending to supply and install a modern banking information system within two years, followed by nine years of operation and maintenance.
The aim was to reduce reliance on the national asset management company, Kedipes, a goal that remains unachieved. According to the audit report, issues with a subcontractor and serious administrative deficiencies within the agency led to early derailment of the project.
Administrative Weaknesses and Board Issues
Papaconstantinou noted that the incomplete formation of the board of directors and the lack of a general director exacerbated the situation. He stated, “These weaknesses had a decisive impact on the timely adoption of corrective decisions.” The inability to replace the subcontractor further complicated matters, as the agency issued a notice of termination in October 2023, nearly three years past the original deadline, yet the contract was never formally terminated.
Contract Amendments and Legal Concerns
In December 2024, the agency approved an amendment that fundamentally altered the contract’s scope. Instead of fulfilling the original mandate of implementing a new information system, the contract was effectively limited to the utilisation of existing equipment and peripheral systems. Papaconstantinou condemned this adjustment, asserting, “In our view, this choice was not lawful.”
The audit revealed that this amendment violated public procurement laws due to the substantial changes made to the contract’s subject matter. Additionally, required approvals for extensions and modifications were either delayed or obtained post-factum, breaching established regulations.
Financial Burdens from Delays
From 2021 to 2025, the absence of a new banking system forced the agency to continue depending on Kedipes and to upgrade its outdated software, incurring extra costs of at least €3.55 million. This figure does not encompass administrative expenses or broader repercussions stemming from the failure to implement the new system.
By December 2023, payments to Kedipes for IT infrastructure had reached approximately €5.19 million, with an extension of the agreement adding another €1.94 million for the years 2024 and 2025. A further extension, approved in December 2025, is projected to cost an additional €1.23 million to cover 2026, as the agency continues to acknowledge its lack of technological independence.
Operational Impact on Services
The decision not to terminate the original contract has resulted in a direct financial loss, depriving the agency of the ability to claim a performance guarantee worth €452,350. Beyond mere financial implications, the audit underscores the adverse effects on customers. The absence of a modern system has hindered the agency’s capability to offer essential banking services. Currently, credit cards, electronic banking, and ATM facilities remain unavailable.
Competitive Landscape and Future Concerns
Papaconstantinou remarked that the agency is intended to operate as “a modern, healthy and competitive bank, capable of effectively supporting housing policy and the economy.” However, the current operational state falls significantly short of this objective. The audit report has been forwarded to the central bank governor, accompanied by a separate correspondence detailing additional concerns.
As the housing finance agency grapples with these issues, the implications for its future operations and its role in the housing sector remain uncertain. Investors and stakeholders will undoubtedly be watching closely as the agency seeks to rectify these strategic failures and regain its footing in a competitive marketplace.
