Cypriot leaders and eurozone bankers scrambled Sunday to come up with a bailout deal ahead of a Monday deadline for Cyprus to secure a $13 billion bailout. A deal reached last week collapsed when the Cypriot Parliament rejected a plan for a one-time tax on all bank deposits so the government could raise matching funds to secure the bailout.
Officials in Brussels agreed to a deal calling for a levy on bank deposits of more than 100,000 euros ($130,000), and some reports indicated the levy on deposits at Cyprus' second-largest bank -- Laiki Bank -- could be as great as 40 percent, the BBC reported.
The deal may also call for Laiki to be divided into "good" and "bad" banks. Citing an EU official, the BBC said earlier Sunday a draft agreement called for Laiki Bank to be wound down.
It was unclear whether the Cypriot Parliament would agree to a tax on deposits of more than $130,000, the report said, but the BBC reported the provision on deposit taxes will, at the insistence of the IMF, not be subjected to a parliamentary vote.
Asian financial markets were up on news of the agreement.
The Nikkei average was up 1.38 percent to 12,508.71 in early trading and the HangSeng was up .97 percent to 22,330.16.
The Bank of Cyprus -- the nation's biggest lender -- said Sunday it would further restrict depositors' ability to take cash out of ATMs, limiting daily withdrawals to 120 euros ($155). Laiki Bank said it would limit daily ATM withdrawals to 100 euros ($130), the Cyprus News Agency reported.
Banks have been closed for a week and many retailers are refusing to accept payment in anything but cash, the BBC said.
Cypriot President Nicos Anastasiades flew to Brussels for the meeting with Mario Draghi, president of the European Central Bank, and other financial officials, The New York Times said Sunday.
If no deal is made and no extension is offered, European funding essentially propping up Cyprus' two main banks will stop and they will collapse, officials said.
"The situation is very difficult," Anastasiades said in a statement.
It is estimated the banks need about 10 billion euros ($12.9 billion) to recapitalize.