The eurozone has struck a deal to hand Cyprus a bailout worth 10 billion euros ($12.5 billion), but demanded bank depositors help foot the bill.
The eastern Mediterranean island has become the fifth country after Greece, Ireland, Portugal and Spain to turn to the eurozone for financial help during the region's debt crisis.
In a radical departure from previous aid packages - and one that gave rise to incredulity and anger across the country - eurozone finance ministers are forcing Cyprus' savers to hand over up to 10 per cent of their deposits to raise almost 6 billion euros ($7.5 billion).
Almost half of its depositors are believed to be non-resident Russians, but most of those queuing at ATMs on Saturday to take out their cash appeared to be Cypriots.
"I wish I was not the minister to do this," Cypriot finance minister Michael Sarris said after 10 hours of late-night talks in Brussels, where the package was hammered out.
Mr Sarris added the levy was the "least-worst option", while the president, Nicos Anastasiades, defended it as a "painful" step taken to avoid bankruptcy.
Without a rescue, Cyprus would default and undermine investor confidence in the eurozone that has been built up by the European Central Bank's promise last year to do whatever it takes to shore up the currency bloc.
The bailout was smaller than initially expected and is mainly needed to recapitalise Cypriot banks that were hit by a sovereign debt restructuring in Greece.
They call Sicily the island of the mafia. It's not Sicily, it's Cyprus. This is theft, pure and simple.
The deposit levy - set at 9.9 per cent on bank deposits exceeding 100,000 euros and at 6.7 per cent on anything below that - will take place after a bank holiday on Monday.
To guard against capital flight, Cyprus has taken steps to prevent electronic money transfers over the weekend.
"I'm extremely angry. I worked years and years to get it together and now I am losing it on the say-so of the Dutch and the Germans," said British-Cypriot Andy Georgiou, 54, who returned to Cyprus in mid-2012 with his savings.
The levy breaks a eurozone taboo by hitting bank depositors with losses.
"They call Sicily the island of the mafia. It's not Sicily, it's Cyprus. This is theft, pure and simple," said a pensioner.
The island's bailout had repeatedly been delayed amid concerns from other EU states that its close business relations with Russia, and a banking system flush with Russian cash, made it a conduit for money-laundering.
In return for emergency loans, Cyprus agreed to increase its corporate tax rate by 2.5 percentage points to 12.5 per cent.
This should boost revenues, limiting the size of the loan needed from the eurozone and keep down public debt.