Investment bank Morgan Stanley says it is done cutting jobs and going back on offense, spending some of the $1 billion it saved slashing 4,800 jobs in the past year to recruit top bankers and traders.
Like most banks, Morgan Stanley has been nursing wounds suffered during the breakdown of debt markets last summer.
The firm, which has recorded $14 billion of write-downs, cut its staff by 10 percent in January and April while also reining in trading risk and conserving capital.
But lately Morgan Stanley Chief Executive John Mack and other top executives became convinced that the firm had cut enough, said spokeswoman Jeanmarie McFadden, a long time confidant of Mack.
"We feel that right now, for these markets, we are right-sized," she said.
Mack saw the continuing turmoil on Wall Street and layoffs among competitors—75,000 jobs eliminated so far—as a rare opportunity to recruit some prized bankers, traders and risk management executives.
Morgan Stanley expects that making these hires now, when there is reduced competition for talent, will help Morgan Stanley profit when markets eventually recover, she said.
In the past few days, Morgan has hired seven executives to strengthen its derivatives, commodities, restructuring and investment banking businesses. Hiring Spree
The New York-based bank earlier Thursday said it hired Luc Francois, the former head of equities at France's Societe Generale, to be Morgan's global head of equity derivatives and head of European equities.
Francois, who starts in September, will be based in London.
Other hires, based in New York, include former Bear Stearns senior executives Thomas Wong and Eric Cole.
Wong joins as head of proprietary trading, while Cole was named co-head of distressed debt sales, trading and research.
Former Merrill Lynch head of commodities risk management James Brown will join as Morgan Stanley's head of global commodities risk, a newly created post. Lazard's Blake O'Dowd will join as the head of restructuring.
The bank also filled in some gaps in its investment banking business, adding Michael Eck from Citigroup as global head of consumer industries banking, while Chris Iannaccone was hired from JPMorgan Chase to be its head chemical industry banker.
In global wealth management, which has not suffered job cuts, Morgan Stanley has been especially aggressive, taking on brokers from a number of rivals.
So far this year the firm has added 519 people, compared with 622 in all of 2007.
Meanwhile, Morgan has bulked up its presence in China -- now totaling 200 people -- as well as in Dubai, Turkey and Brazil as part of a broader push into fast-growing overseas markets.
In all, Morgan Stanley has spent about $400 million of savings realized from its job cutting on new staff.
The firm may not redeploy the entire $1 billion into new staff.
The hiring spree will not come at a cost to existing employees of the firm, because the additional compensation will be funded from savings and not the bonus pool accrued during the year, Markets remain uncertain, and it is still possible that more jobs would be cut, McFadden said. "We don't rule anything out. We'll continue to monitor the situation, and we'll adjust as needed."