The decree imposing the unprecedented measures for the euro-zone country will apply to all bank accounts, not just Cyprus Popular Bank and Bank of Cyprus.
Beyond the immediate problems firms here will face because of a limit on transactions and a freeze of banking activity, Mr. Pilikos said he feared many of his organization's members wouldn't survive the blow delivered by the closure of Cyprus Popular Bank and the hefty haircut imposed on deposits in Bank of Cyprus.
The ratings firm downgraded Cyprus Popular Bank to D, equivalent of Default and Bank of Cyprus to "SD", "Selective Default".
WSJ: Greek Stocks Slump; Investors Play Catch Up on Cyprus Worries
The chancellor also said the future of UK branches of Laiki Bank - also known as Cyprus Popular Bank - was the subject of discussions between the Treasury and Cypriot authorities.
State broadcaster CyBC said employees of Cyprus Popular Bank, the country's second largest, were told on Thursday afternoon the bank would be closing down.
But talks in Russia appear to have ended with no agreement, and the latest plans involve dividing up the second-largest of Cyprus's stricken banks - Cyprus Popular Bank (also known as Laiki Bank) - into a "good" and a "bad" bank.
The island's two largest banks, the Bank of Cyprus and Popular Bank, were bailed out following massive losses.
So the big financial institutions like the Bank of Cyprus and Popular Bank asked for a bailout from the government, and the government came to the EU in June 2012 saying it needed a bailout in turn.
The rest would have come from Cyprus itself and from those large depositors in the Bank of Cyprus and Laiki (Popular) Bank.
Popular Bank will be broken up immediately, and its viable assets will be integrated into the Bank of Cyprus.
One of our companies has been banking with LAIKI (Cyprus Popular Bank) and we have had current accounts with the bank.
Most of the bailout money is expected to go to Cyprus Popular Bank, the island's second-largest lender, which is heavily exposed to debt-laden Greece.
The roots of the crisis go back to 2006 when the Cyprus Popular Bank, the country's second biggest bank was taken over by a smaller Greek bank.
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