BRUSSELS (AFP) - The European Union on Monday handed over the first two billion euros (S$3.2 billion) of loans agreed under the controversial Cyprus aid deal, the bloc's European Stability Mechanism said in a statement.

The euro rescue fund said the first tranche in a 10-billion-euro loan package in exchange for breaking up the Cypriot banking sector was "transferred today," with a second release of "up to one billion to be transferred before 30 June 2013."

An unprecedented "haircut" on deposits forced the Cypriot government to close all the island's banks for nearly two weeks in March and impose Draconian controls when they reopened to prevent a run on accounts.

The announcement came shortly after finance ministers from the euro zone gathered in Brussels for unusually calm talks that were also set to approve a fresh batch of funding for Greece.

Tougher disputes were expected on Tuesday over banking union and a planned crackdown on tax evasion when the ministers were to be joined by their European Union counterparts.

German Finance Minister Wolfgang Schaeuble appeared to put the brakes on an existing roadmap towards integration of the eurozone banking sector when he warned in Monday's Financial Times that EU treaties would need amending in order to create a cross-border resolution mechanism for failed banks.

French counterpart Pierre Moscovici said that Mr Schaeuble's remarks were "in no way a brake" on the scheme, agreed in theory by EU leaders last year but toiling to become a reality any time soon.

Eurogroup chair Jeroen Dijsselbloem said Mr Schaeuble was raising "substantial" issues, but like Mr Moscovici, he stressed that there was already "a lot" that could be done to nail down existing draft legislation before treaty change would become a factor.