Authorities in Cyprus, scrambling to find a way of the bailout crisis, are anxious to ensure the survival of the island’s largest bank.

Sources close to the negotiations said on Friday that a restructuring of Cyprus Popular Bank, the island’s second largest lender appeared inevitable.

But Nicosia is determined to prevent a knock –on effect on the Bank of Cyprus.

A bill that would enable authorities to restructure the banking sector was approved by cabinet on Thursday and is being discussed by the House of Representatives, but it remains unclear when it will be put to the vote.

The European Central Bank has said that it will cease emergency funding to the banking sector on Monday unless Cyprus secures an agreement with the Troika.

This would mean the two banks, particularly the Popular Bank, would be driven into disorderly default, pushing the economy towards collapse.

The same sources said that Cyprus may need to reconsider its rejection of a haircut of deposits.

Authorities are anxious to protect local small depositors under the €100,000 insured sum.

Cyprus has found itself in the middle of a turf war between the EU and Russia. Finance Minister Michalis Sarris was due back from Moscow on Friday without having secured any large investment from Moscow.

Bank employees and depositors on Friday are continuing to demonstrate outside the House of Representatives, demanding that Popular Bank is not sacrificed.

Officials from the bank told state radio that the plan for Popular would be disastrous for employees, customers and also for the economy as a whole.