Big Five – KPMG set for client losses

Merger activity in the oil and financial services industries could lose KPMG two major audit clients, it emerged this week.

The firm will be comforted, however, by winning the lucrative audit contract for newly merged property giant Jones Lang LaSalle in the US.

Formed by a link-up between Jones Lang Wootton, a private UK business owned by partners and staff, and US-based LaSalle Partners, the company will have 6,000 employees in 34 countries.

In a blow to the firm, though, a senior source within the finance department at fund manager M&G Group confirmed that the takeover of the company by Prudential would be a ‘catalyst’ for a review. PricewaterhouseCoopers, the auditor of Prudential, has emerged as a likely candidate to take over the chief auditor role.

The source said: ‘We have been with KPMG since 1993, so it is probably about time for a rethink. We would be very surprised if being part of Prudential did not prompt some movement.’

He added that PwC already works with the company on a number of M&G’s unit trusts and a decision could be made over the next year.

The Prudential’s corporate finance manager David Doyle said that, with the current plans, it was hoped the deal would be completed by June. He added that, although it was too soon to consider M&G’s auditors, it would be a matter for consideration.

In the oil industry, the prospect of a beauty parade between KPMG and Ernst & Young moved a step closer last week as Enterprise Oil confirmed it was still in merger talks with rival Lasmo. A merger would create a combined oil group valued at around #2.3bn. Enterprise uses KPMG, while Lasmo is an E&Y client.

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