Peru was in a tough spot 20 years ago. A violent insurgency by leftist rebels was threatening to topple the government, while the economy was coming out of a long stretch of hyperinflation that had wiped out the savings of local residents. Today, much has changed in the Andean country. It's been one of Latin America's fastest growing economies in recent years, helping millions of people escape poverty.
Walter Bayly, the CEO of Banco de Credito del Peril, the largest bank in the country, credits the return of political stability and government reforms in the 1990s for the turnaround. After living abroad for 13 years, Bayly returned to Peru in 1993, a year after the capture of Abimael Guzman, the leader of the Shining Path insurgency.
"One of the key elements that triggered my decision to return was the fact that terrorism was starting to come under control," Bayly says. "It was a country after war. The country as a whole, I would say, had practically collapsed," Bayly adds, remembering his first impressions of Peru after his return. "It was still a moment in time in which many of us Peruvians questioned whether Peru was viable."
As Peru's economy began to open up, the banking sector was transformed. State-run banks were privatized and foreign financial institutions set up shop. Competition heated up.
Banco de Credito's first move was to bring in a new set of managers, many of whom had international banking experience. "We began transforming the bank to be more competitive," said Bayly, one of the new managers at the time. "What had made us successful in the past was clearly not what was going to make us successful in the future."
One of Bayly's early positions at Banco de Credito was to run the bank's offices outside of Lima, a challenging task in Peru, since communication between vastly diverse regions could be patchy.
To stay on top of local developments, Bayly formed relationships with community leaders who provided on-the-ground insight. "I formed important relationships with maybe 20 or 30 important business men in their own cities or regions...