People with over 100,000 euros (£84,300) in Bank of Cyprus accounts could lose up to 60% of their savings in a harsh new EU and IMF bailout deal.
For the first time ever a eurozone deal has forced a bank's customers to contribute to a bailout.
Major depositors could lose up to 37.5% after their savings are turned into shares, while a further 22.5% more of their money could be taken if it is deemed necessary to prop up the banks.
There were widespread protests against an earlier deal which proposed to tax all deposits
Strict measures were expected to secure a €10bn bailout from the eurozone and the International Monetary Fund, but according to the BBC's Mark Lowen many are shocked at how much savers could lose.
Although Cyprus' banks are open once again, they are subject to strict capital controls to prevent a run on the banks. Daily withdrawals are limited to 300 euro a day and payments and transfers outside Cyprus via debit and or credit cards are limited to 5,000 euros per month. There has been no time limit put on how long these controls will last.
Cyprus' second-largest bank, Laiki, will be wound down and restructured into "good" and "bad" sections with the healthy assets to absorbed into the Bank of Cyprus eventually.
An earlier deal collapsed after the Cypriot parliament rejected a proposed levy on all deposits.
The possibility that depositors will be forced to stump up their own cash to help save the banks has led to suggestions people will simply stop holding more than 100,000 euros in eurozone banks.
However German Finance Minister Wolfgang Schaeuble reassured other eurozone countries that their deposits were safe telling German newspaper Bild that Cyprus was a "special one-off case."