THE accountancy industry has been set abuzz by last week's news that international giant Deloitte Touche Tohmatsu is planning to merge with Hong Kong's most powerful local Chinese firm, Kwan Wong Tan & Fong.
Combined they would form the territory's largest professional services company.
The deal, yet to be finalised, offers obvious advantages to both firms: Deloitte gets local and mainland contacts, while Kwan Wong clinches an international name as well as access to a big tax department - it only handles audit at the moment.
'Kwan Wong didn't have an international name, but its sizeable clients needed the international recognition,' a senior partner at one of the Big Six accountancy firms said. 'Kwan Wong has lost some potential clients in the past because it wasn't recognised internationally.' In staff numbers, the new firm will be 40 per cent bigger than the current accounting leader, Ernst & Young, with 1,850 staff compared with Ernst's 1,300. Since the two specialise in different areas and have different markets, job losses are likely to be close to nil, sources says.
The question now is: Are Kwan Wong's extremely influential clients - including Cheung Kong Holdings, Sun Hung Kai Properties, Henderson Investment, Sino Land and Hopewell Holdings, as well as the Bank of China - up for grabs? One partner at a Big Six firm said that with Kwan Wong's influence within the enlarged firm bound to drop, the group was in danger of losing clients.
Not surprisingly, a source close to Deloitte said Kwan Wong's clients were unlikely to look elsewhere. Deloitte, the source said, had already talked to Kwan Wong's clients and chalked up their support for the merged firm. 'So far, none of them has shown a lack of interest,' the Deloitte source said.