The proposed tax on bank deposits in Cyprus has taken its toll with the reported bombing of a Bank of Cyprus branch in Limassol. Reports said that an improvised explosive device caused the blast which destroyed the window of the lender and created a small fire.

NewsitCy Cypruse said two masked man broke into the branch's main entrance and threw a Liberian container with flammable materials. The entry was recorded by the bank's CCTV.

There were, however, no reports of injuries resulting from the blast.

Violent incidents like the above could be anticipated, particularly from depositors of the Popular Bank of Cyprus or Laiki after the country's officials, the European Union (EU) and the International Monetary Fund (IMF) tentatively agreed to stave the bankruptcy by shuttering Laiki, considered a bad bank.

Caught in the middle by the proposal - to be presented to eurozone finance ministers for discussion - are the bank's depositors with savings of more than €100,000. EU laws said such amounts are not insured and will be frozen to be used to cover the country's debt.

However, depositors of Laiki will deposits less than €100,000 will have their money transferred to the Bank of Cyprus.

The proposal is an initial turnaround from the first proposal to tax all bank deposits in Cyprus with two rates, which caused queues at ATMs as the country's banks went on an extended holiday to avert a bank run.

Expected to be affected by the new proposal are Russians who hold large amounts of deposits in the two Cypriot banks.

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