Lines formed at many ATMs today as people scrambled to pull their money out after word that the £10 billion rescue package Cyprus agreed with its euro area partners and the International Monetary Fund included one-off levy on deposits - an unprecedented step in the eurozone crisis.
But their attempts to avoid or lessen their tax burden by withdrawing cash today appeared to be in vain.
Cypriot bank officials said that depositors can access all their money except the amount set by the levy, and officials added that withdrawing funds today would not reduce anyone's levy.
European officials said people with less than £100,000 in their accounts will have to pay a one-time tax of 6.75%, those owning more money will lose 9.9%.
The levy is expected to raise £5.8 billion.
There are 59,000 British residents in Cyprus and 1.1 million Britons visit the island every year, the Foreign Office said.
The country's co-operative banks also shut their doors after depositors gathered in hopes of protecting their savings.
Unlike commercial banks which remain closed on weekends, co-operative banks customarily open for business on Saturday.
The co-operative banks, which represent about a fifth of the island's banking sector, remained open only for a short time. However, people continued to have access to their funds through ATM machines.
Christos Demetriades, 58, who was outside a shut Nicosia co-operative bank branch, said: "Politicians and senior bank bosses have covered each other's backs for years, now it's ordinary people who are paying the price and are being punished."
One disgruntled customer at a branch in the southern coastal town of Limassol briefly parked his tractor in front of its shut doors in a show of frustration.
Cyprus' Finance Minister Michalis Sarris defended the decision to accept the levy, saying it was either that or a complete economic meltdown.
"This was the least worst option," he told state broadcaster CyBC. "We battled to prevent the country from completely going bankrupt."
News of the levy came as a shock to most people following strict assurances from President Nicos Anastasiades that he would not accept a deal which required depositors to share in the losses.
Cypriot and European officials feared that forcing depositors take a hit would undermine investors' confidence in Cyprus and other weaker eurozone economies - and even possibly lead to bank runs.
Spain's economic ministry said Saturday that the Cyprus deal would not set a pattern for other countries.
"This is a specific agreement for Cyprus, with its complex situation and an oversized banking sector, which represents 80% of GDP, well above any other country in using the euro," a ministry statement said.
"Because of this, Cyprus' situation and this agreement are not transferable to any other country in the eurozone."
Cyprus has become the fourth euro area country to get a rescue package to save its banks that took massive losses because of their exposure to toxic Greek debt.
The levy stirred up a political firestorm on the tiny island of a million people, with some politicians accusing the government of leading the country to "a tragic dead end".
Government spokesman Christos Stylianides said Cypriot officials had resisted intense pressure to accept a deposit levy of a whopping 40%.
Bank bosses are meeting with Central Bank officials to figure out their next steps, while Mr Anastasiades, who returns to Cyprus this evening, has called for a meeting of party leaders to assess the unfolding situation.
Sharon Bowles MEP, chair of the European Parliament's Economic and Monetary Affairs Committee, said she is appalled by the bailout.
"This grabbing of ordinary depositors' money is billed as a tax, so as to try and circumvent the EU's deposit guarantee laws. It robs smaller investors of the protection they were promised.
"If this were a bank, they would be in court for mis-selling," she said.
Bank of Cyprus UK said on its website today: "Whilst the measures agreed include an up-front one-off stability levy on deposits in Cyprus, there is no effect on deposits with Bank of Cyprus UK Limited which is a UK bank.
"Bank of Cyprus UK Limited is a separately capitalised UK incorporated bank, is subject to UK financial regulation, and eligible depositors are protected by the UK's Financial Services Compensation Scheme."
Laiki Bank UK said on its website: "Your eligible deposits with Laiki Bank UK are protected up to a total of 100,000 euro by the Cyprus Deposit Protection Scheme and are not protected by the UK Financial Services Compensation Scheme.
"Any deposits you hold above the 100,000 euro limit are not covered."
Customers in the UK using Bank of Cyprus UK and Laiki Bank UK will be reassured by the statements on their websites which seek to assure customers that their deposits are not impacted by the levy and UK operations are unaffected.