NICOSIA (AFP) - Cyprus' two biggest lenders on Friday, March 22, urged lawmakers to accept the option of a tax on bank deposits, which they had earlier rejected, to save the sector from collapse.

"It should be understood by everyone... especially from the 56 members of parliament... there should not be any further delay in the adoption of the eurogroup proposal to impose a levy on deposits more than 100,000 to save our banking

system," said Bank of Cyprus chairman Andreas Artemis.

"A collapse of the banking sector leads to the total loss of every single deposit exceeding euro 100,000 (S$161,550), and the immediate realisation of collateral accompanying non-performing loans... many business and thousands of jobs will also be lost," said the chief of the island's largest commercial bank.

His counterpart at Popular Bank (or Laiki Bank), which has been facing a run since Thursday, too urged MPs to adopt the tax on deposits.

"Although we knew the gravity of the situation, and the initial proposal of the eurogroup was painful, it ensured the future of the banking sector," Mr Takis Phidias told state radio.

On Friday, government spokesman Christos Stylianides said Nicosia was locked in "hard negotiations" with a troika of lenders to save the eurozone member's banking system and economy in general from ruin.

"In a few hours we will be called upon to take the big decisions and reply to the hard dilemmas," Mr Stylianides said as the government raced to secure a bailout to meet a Monday deadline for a deal.

"The House of Representatives will soon be called upon to take the big decisions. Undoubtedly, there will also be painful aspects in any decision taken, but the country must be saved," he said.

He was referring to an emergency session of parliament expected later on Friday to examine a raft of eight bills aimed at raising billions of dollars to secure a vital EU-IMF bailout.

"The next few hours will determine the future of this country. We must all assume our responsibility," Mr Stylianides said.

The European Union has given Nicosia until Monday to raise 5.8 billion euros to unlock loans worth 10 billion euros or face being choked from European Central Bank emergency funding in a move that would bankrupt the island.

EU sources have said the bloc is ready to eject Cyprus from the eurozone to prevent contagion of other debt-hit members such as Greece, Spain and Italy.