Ernst & Young is to merge 87 firms, including the UK firm, into one unit.

The move will see firms from Europe, the Middle East, India and Africa become part of one 'EMEIA' firm, headed by UK boss Mark Otty.

The moves were announced at 8am today and briefed to morning newspapers ahead of the announcement.

Deloitte and PricewaterhouseCoopers remain loose networks of affiliated firms under a global brand, while KPMG UK has merged with European counterparts to become KPMG Europe.

The European moves for E&Y are accompanied by a similar move in the Far East, where firms from across 15 countries are also to merge.

The exact nature of the merger is unclear at present, however. The firm has run a unit comprising Northern Europe, the Middle East, India and Africa (NEMIA) unit, which Mark Otty heads. But it is thought the new structure will mean more powers from firms in individual countires will be devolved upwards.

It is not clear to what extent profits will be pooled, or the risks associated with operating a global firm.

'The EMEIA area will operate as a single unit, led by a single area executive team with one shared strategy and sharing of costs and investments. All 3,300 partners across EMEIA will have a common approach to performance evaluation and compensation,' a spokesman for E&Y said.

As far as liability is concerned, John Ferraro, the firm's global chief operating officer, said: 'We've looked at the risk and we don't believe we've taken on appreciably more risk by doing what we are doing.'

The new area will be a $11.2bn (₤5.6bn) organisation with more than 60,000 staff.

The 3300 EMEIA partners will vote on the integration by the end of May and the new unit will be effective from July 1.

The integration of the Far East area creates a $US1.2bn organisation with more than 20,000 people, also effective from July 1. David Sun and Jim Hassett will be the Far East co-area managing partners.

The move towards a merger comes as a surprise, especially as Otty only recently suggested that the firm would be pushing ahead with its looser connections of firms.

Referring to those arrangements, Otty told Accountancy Age in April of last year: 'We haven’t created one profit pool and I don’t believe we would be able to in the current regulatory climate.'

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