The recent deal to create Morgan Stanley Smith Barney is a tantalising one for embattled Aussie i-bankers in need of reassurance that their industry is still viable down under.

It offers them the prospect that Morgans - after years of being a smallish player locally - might soon become an enlightened employment choice, a firm able to fight on the deal-front with the likes of UBS, J.P. Morgan, Goldman Sachs and Macquarie.

The bank is inheriting 200 financial planners and advisors from former Smith Barney owners Citigroup – a massive addition to its existing 350-strong Australian headcount - but what are the prospects for new hiring in the current market?

Steve Harker, Morgan Stanley’s chief executive in Australia, is certainly talking a growth game. He reckons the time is right to break the grip that the major i-banks have on domestic underwriting. Having access to the Smith Barney retail client base is certainly a big boost when it comes to pitching for work. And having Aussie James Gorman in charge of the joint venture globally won’t hurt either.

The chances of Morgans growing its workforce here as it develops a full-service i-banking platform look cautiously optimistic, although the details of its employment strategy remain unclear because the bank’s leaders are still debating how best to integrate Smith Barney.

If the firm moves up the deal ladder, it could choose to develop a larger local support structure, rather than relying on overseas offices. And it could go counter-cyclical with its hiring, building up its team now when talent is comparatively cheap.

But both tactics still require confidence and cash, two things which are in woefully short supply at the moment. More realistic perhaps is a slow build up of strength, with the odd strategic hire this year.

Will Morgans make any other major moves in '09? Or will it flog off Smith Barney to Macquaire or NAB as soon as the going gets tough. Give us your thoughts below.