As the Big Six prepare to merge into the Big Four, some of the accounting industry's chief clients-banks-are reviewing relationships and bracing for higher prices.

The two pairs of accounting firms that are expected to merge this spring count 22 of the 25 largest banks in the United States among their audit clients. KPMG Peat Marwick and Ernst & Young audit 17 of these banks; Price Waterhouse and Coopers & Lybrand audit five, according to Public Accounting Report, an industry newsletter.

Though all corporations face the prospect of having fewer major accounting firms to choose among, the field is looking particularly tight to bankers.

With consolidation, fewer eyes will be looking over more banks, raising issues of conflict of interest or staff being stretched too thin. Additionally, banks in the same communities will now be more likely to have the same accountants poring over their books and those of their competitor- a prospect that makes some bankers uneasy.

Accounting firms "don't play a day-to-day role in management," said Jim Hogan, controller at Star Banc Corp., Cincinnati. "But they are key advisers to us for all types of questions that come up."

That is because banks, more than many types of companies, rely on accounting firms for a myriad of consulting and operations services in addition to regular audits, said Donna Fisher, director of tax and accounting for the American Bankers Association, Washington.

Accountants regularly "get into business issues" at banks and are often looked upon as virtual staff members, Ms. Fisher said. A key question for banks is whether they will "get the same level of service" after their accounting firms have merged-particularly if staff is shuffled around.

The banking industry spends about $2 billion a year on audits and consulting services by certified public accounting firms, according to the Bank Administration Institute. In some banks, outside auditors spend virtually the whole year on-site, often having offices and participating in senior-level meetings.

Although bankers stress they are not deeply worried about the mergers, they are keeping a watchful eye on how they develop.

"We still have the resources and experienced people we need," said a spokesman for BankAmerica Corp., which uses Ernst & Young as its outside auditor. "If negative impacts do occur, we have other options."

Experts say it is wise for banks to monitor their accounting services closely as the mergers proceed. With fewer firms available to audit banks in a given community, it could be harder for banks to find a partner who will tailor solutions to them. Breaches of confidence could also crop up.

"As you get fewer accounting firms able to serve banks' needs, the chances for conflicts are greater," said George Kuzma, chairman of the financial institutions unit of the New York State Society of Certified Public Accountants. "There are a number of issues that have to be addressed."

Additionally, bankers may find that accounting firms are demanding higher fees and are less willing to negotiate.

"It's a simple matter of economics. There will be fewer accounting firms, and they will charge more," said Richard Telberg, editor-in-chief of Accounting Today, a magazine published by Thomson Financial, which also publishes American Banker. "It's hard to see where there will be benefits for banks."

Some banks use different accounting firms for auditing and consulting services, and therefore have to keep tabs on multiple partnerships.

First Western Bancorp, New Castle, Pa., uses Ernst & Young for consulting on its management information systems. (Its auditor, Deloitte & Touche, is not in a merger agreement.)

Robert Young, chief financial officer of the $1.7 billion-asset banking company, said he has been in contact with Ernst & Young and feels confident that the merger will not disrupt services to his bank.

But Mr. Young-who said he spends $200,000 to $250,000 a year on accounting services-said banks should not take the mergers lightly. "The range of solutions, whether your organization is looking to change firms or bid out services, has certainly been reduced," he said.

Representatives of the accounting firms said they are sensitive to the issues and have been in touch with many of their banking clients. Exact details of the mergers, and how staff will be allocated, have not been decided, spokesmen said. But they did say services and quality could increase as the best and the brightest from the merged firms stay on and new expertise is added.

Second-tier accounting firms like Grant Thornton and McGladrey & Pullen, which have a strong following among community banks, might stand to pick up some business as the bigger firms merge. But observers say the Big Six- Arthur Andersen & Co. rounds out the pack-have an important edge.

"There's cachet in having a clean opinion from one of the Big Six," said Mr. Young of First Western.

Banks like to go with top firms because of their deep benches and familiarity with the inner workings of financial institutions, said Mr. Kuzma of the New York State CPAs group. He is principal of GMK Associates, a small accounting firm in Glen Rock, N.J.

One consultant, pressed for details of how banks would be affected by the consolidation among accounting firms, could not help but note the parallels to mergers in the banking industry.

"We're getting a taste of our own medicine," said the consultant, who requested anonymity.

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