The Bermuda office of the global accounting firm KPMG has distanced itself from an international spat over the defection of its Canadian branch to a major rival.

International offices of Arthur Andersen on Friday trumpeted the planned "merger'' which would see KPMG's Canada arm absorbed into Arthur Andersen's worldwide organisation.

But senior London and New York based executives of the KPMG International empire immediately attacked the move, blaming it on an out-of-touch leadership and vowed to start an "aggressive'' fight to reclaim its most important clients.

On Friday KPMG Bermuda managing partner Bob Steinhoff stressed the row would scarcely have an impact on local clients or the business community.

And he pointed out that the decision to join Arthur Andersen still needed to be ratified in a vote of Canadian partners on April 9.

"KPMG has very little referral business from the Canadian practice,'' he said.

"Very few Canadian clients have Bermuda captives because the tax structure has favoured Barbados as their captive jurisdiction, so this is going to have virtually no affect on the practice of KPMG in Bermuda.

"In any case, it is still to be determined whether all of the KPMG partners will join Arthur Andersen or whether any will remain to form a new KPMG firm.'' In a statement issued from New York, KPMG International chairman Colin Sharman admitted the move in Canada had sent ripples of shock through the firm -- made up of 92,000 professionals including 6,700 partners in 157 countries.

"We were surprised at Canada's decision, particularly in view of their continued assurances to us and their partners that they wished to remain part of the KPMG organisation,'' he said.

"We're moving ahead quickly in response to today's news.

"We've already opened a dialogue with key practice leaders among Canada's partners to ensure that the most respected and valuable portions of the entity remain within KPMG International.

"We will be aggressive in preserving the practices and the clients that are most important to KPMG.'' He added that the Canadian firm's leadership had been unwilling to contribute to the international firm's global development costs.'' The merge was pushed by a leadership which may not "be in touch'', he said.

"Canada was the least profitable on a net-income-per-partner basis, of any KPMG member firm in North and South America.

"Ironically, their announced departure removes what had been perceived by KPMG as an impediment to consolidation of KPMG's national practices in North America and Latin America.

"Indeed, their leadership's diminished role in a regional entity may well have contributed to their decision.'' Arthur Andersen Bermuda offered no comment, but a statement from their Toronto office said the merger would become effective October 1 as long as it complied with regulatory approvals and was ratified by both firms.

It would create the largest professional services firm in Canada.