A merger of KPMG and Andersen in the Irish market is still on the cards despite reports that discussions between Andersen’s non-US operations and KPMG had broken down.
Earlier it emerged that the Spanish arm of accountancy giant Andersen had decided to link up with rival Deloitte & Touche, effectively signalling the break-up of Andersen's international business.
Andersen Spain said in a statement it was attracted by the similarities in business practice and that the union would offer Spanish clients a comprehensive service in the United States, where Deloitte is the second-largest accounting firm.
In doing so, Andersen Spain has turned its back on talks with rival KPMG over a proposed international merger.
However KPMG said today talks between the two Irish branches were continuing.
This was confirmed by a spokesman from Andersen Worldwide who dismissed talk that it and KPMG have called a halt to merger talks between the member firms outside the US.
"Talks in the UK are ongoing," said a spokesman for Andersen Worldwide. The merger in the Irish market would create a firm with 1400 employees.
Earlier a source close to the negotiations said the KPMG merger talks, started just two weeks ago, were close to collapse after the Spanish defection.
Spain, Andersen's largest practice in continental Europe, is seen as the key to the KPMG deal. Latin America will now go with Deloitte as well, the source said.
He said Singapore, Philippines, Malaysia and Taiwan looked set to merge with Ernst & Young, which is already combining with Andersen in Australia and New Zealand.
KPMG was unable to comment. A merger with Andersen outside the United States would have created an accounting giant with over $12.2 billion in revenues and 140,000 staff.
Andersen, indicted in the United States for its role as auditor of collapsed energy trader Enron, faces billions of dollars in lawsuits and has suffered a mass exodus of US clients.
The collapse of the KPMG talks came as Andersen Worldwide's board met in London to pick a successor to Joseph Berardino, who resigned as chief executive last week.
Mr Aldo Cardoso, chairman of Andersen Worldwide's 18 member board, has been tipped as a possible replacement.
KPMG had been trying to put together a block deal with Andersen partnerships outside the United States. But individual partnerships have been rapidly defecting to rival firms.
Andersen Spain now plans to merge with Deloitte & Touche, Andersen Singapore is in talks with Ernst & Young, while negotiations between Andersen and KPMG in Japan appeared to run into difficulties over the weekend.
Hong Kong and China have done a deal with PricewaterhouseCoopers, Russia, Australia and New Zealand have joined up with Ernst & Young.
The rest of Andersen in continental Europe, including the UK, France and Germany, have yet to decide their future in the light of Spain's defection, the source said.
The board of Andersen Worldwide, the umbrella organisation for Andersen's partnerships around the world, is expected to continue meeting in London today and talks could extend into tomorrow, he said.
Addtional reporting by Reuters