Bank of Cyprus, the island’s largest financial institution, on Monday bought 80 percent of the Russian bank Uniastrum for 576 million dollars (447 million euros), securing a controlling interest.

The purchase represents the largest investment in the Russian banking sector by any financial institution operating in either Greece or Cyprus, giving it impetus as a regional player, said the bank.

`The Bank of Cyprus Group ... took a major step forward today,` said BoC Theodoros Aristodemou.

`The acquisition of Uniastrum Bank is in line with our strategy to expand in new emerging markets and this strengthens further the Group’s prospects to become a powerful regional banking institution.`

The operation is expected to achieve a return on investment in excess of 10 percent within the next two years.

Despite the global credit squeeze BoC believes that Russia’s `under-penetrated` banking system is ripe for investment and `significant potential growth` in the retail sector.

Uniastrum Bank has one of the largest distribution networks in Russia, with more than 220 branches.

With the addition of Uniastrum, BoC now operates a network of more than 550 outlets in Cyprus, Greece, Russia, Romania, Ukraine, Britain and Australia. BoC shares are listed on the Nicosia and Athens stock exchanges.