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First, Morgan Stanley cut 4,800 jobs to save money. Now, it might spend the savings - estimated at more than $1 billion - on new hires.

The Financial Times reports the firm is planning to hire executives with an eye toward “(bolstering) its presence in areas such as derivatives, risk management and proprietary trading." The idea is to recruit the best and brightest among those laid off by other firms and enhance the talent in promising sectors and regions, like the Middle East and Asia.

That's a tack being taken by numerous other investment banks, both bulge-brackets and boutiques, as decision-makers struggle to adapt their organizations both to soft current conditions and the prospect of an eventual recovery.

"A lot of firms are looking at this (market downturn) as an opportunity to hire opportunistically," says Roy Cohen, a New York career consultant. He mentions U.S. Bank (the operating unit of Minneapolis-based U.S. Bancorp) and a number of foreign banks.

Executive recruiter Jay Gaines, chief executive of Jay Gaines & Co., says, "This crisis, unlike other crises, I don't think has blunted hiring. But that hiring is very specific and the standards are different than in normal times." When institutions both hire and cut staff at the same time, "The hiring will be far more surgical and far more precise" than the layoffs, Gaines says.

$400 Million From Cutbacks Already Plowed Into New Hiring

The FT says that Morgan Stanley already invested some $400 million in the salaries and bonuses of new staff. The money came from the savings realized from the earlier layoffs, which amounted to 10 percent of Morgan Stanley's workforce. Most of those layoffs impacted investment banking, fixed income and research. Sources told the newspaper the remaining $600 million in savings could be spent before the end of the year to lure the right candidates – but only the right candidates.

This morning, Bloomberg said the firm had hired Luc Francois, previously head of equities at Societe Generale, to run its European equities and global equity derivatives. Meanwhile, Thomas Wong and Eric Cole, both formerly of Bear Stearns, will head proprietary trading and distressed sales, trading and research respectively. A formal announcement is expected today.

Meanwhile, James Brown will join from Merrill Lynch to become Morgan Stanley's global head of commodities risk, the FT said. Blake O'Dowd is coming over from Lazard to head the restructuring group.