This is a very informative article:
http://www.economonitor.com/dolaneco...banking-drama/
Bottom line: "The total losses of Cyprus banks exceed the resources of the country?s government. If it tried to absorb the cost of a full bailout, government debt would rise to unsustainable levels approaching 200 percent of GDP. The Cypriot government has sought outside aid from the EU, the IMF, even Russia, but it may be some time before it is clear where the ultimate losses fall."
Simplified bottom line: Cyprus banks are (already) failed.
Update:
http://www.guardian.co.uk/business/2...ut-russia-vote
"Cyprus insiders have confirmed to the Guardian that the original plan to tax bank deposits is back on the agenda today. But it's likely that small savers with less than ?100,000 in the bank would be spared (but that's not official) "