NICOSIA (AFP) - Cypriots, reeling from news an EU-led bailout clinched on Monday will close one major bank and cream off money from private deposits at another, hold out little hope their economy will be saved.

"It's a disaster. To me it's too little and too late," Mr Tudor Neagu, a client of Laiki Bank, the island's second largest lender that is to be shut down, said as he tried and failed to withdraw cash from an ATM in Nicosia's Ledra Street.

"I'm unable to withdraw cash as the machine doesn't work. I doubt Cyprus will ever revive again," he lamented, before the customer who was in the queue behind him was also unable to get any cash from the machine.

Under the deal reached between Cyprus and eurozone bosses, Laiki, which is also known as Popular Bank, will effectively be split into a "good" lender and another that holds "bad" assets and would be slowly dissolved.

That transition is to be assisted with 9.0 billion euros (S$14.5 billion) of Emergency Liquidity Assistance provided by the European Central Bank.

The Bank of Cyprus, the country's No.1 lender, survives but will have to endure a "haircut" on all deposits of more than 100,000 euros (S$161,483), in a massive blow to investors including Russians.

The bailout for Cyprus, an eastern Mediterranean island with a reputation as a tax haven, was largely necessitated by huge losses on investments in Greece.

The critical situation has left many people frustrated and worried about their plight in Cyprus, which also has a significant migrant workforce.

"No money in the bank. I need food, I need to pay my rent. I need everything. I came but the bank did not give us our money," said Mr Fawzi Allada, a Pakistani who showed his anger by pretending to tear up his Bank of Cyprus cheque book.

Mr Michael Loizos, a Cypriot pensioner, said he expected there to be massive job cuts in the financial sector once the deal takes effect.

"I foresee that people from the banking sector and civil service will lose their jobs. Salaries will be reduced as will be (the) standard of living," he said.

Most cafes, restaurants and shops in downtown Nicosia were largely empty on Monday morning as Cypriots digested the details of the bailout, an alteration of hugely unpopular plan that would have targeted all bank deposits.

The Cypriot authorities closed banks for 10 days as the government scrambled to find other more palatable sources of financing to hold up its end of the deal.

"To me, the earlier deal was better. At least we would have avoided this uncertainty. But let us see how the new deal goes. A lot depends when the banks open tomorrow," said the owner of a department store.

The store was virtually empty, but for some school children.

"People are still coming to terms with the gravity of the situation. I hardly had any customers this week or even today," she told AFP as behind her two schoolgirls purchased sweets.

Mr Ilias Toursidis, the owner of a shop in one of the Old City's narrow lanes that sells only Russian products, and his assistant Melina were also very concerned.

"If people have their jobs, we also have work. If they don't have their jobs, then we don't have (them)," a flustered Mr Toursidis said as he took his cap off and wiped his brow.

Ms Melina was more anxious.

"If the Russians leave, then we will probably close because only Russians buy from here," she said.