Cyprus Leaves Russia Empty-Handed After Talks Collapse

Cyprus' finance minister is returning to Cyprus from Russia after two days of talks with officials which failed to deliver a deal to rescue Cyprus.

An EU official and a Cypriot spokesman told CNBC that Russia had accepted an extension of an existing five-year loan set to expire in 2016, but offered no further information.

Russia's finance minister Anton Siluanov told reporters that talks had ended without a result, saying that Russian investors were not interested in Cyprus's offshore gas reserves. Cyprus had offered Russia the chance to develop its offshore gas reserves as part of a deal for financial aid.

"The talks have ended as far as the Russian side is concerned," Siluanov told reporters on Friday.

Cyprus faces intense pressure find a solution for an international bailout to avert a collapse of its banking sector and a possible exit from the euro zone.

The Cypriot parliament is reconvening for emergency talks on Friday after the European Union issued it with an ultimatum to raise the 5.8 billion euros ($7.4 billion) necessary for a 10 billion euro bailout package by Monday. The European Central Bank said it would cut off liquidity to Cypriot banks without a deal.

Parliament will discuss a number of alternatives to a controversial tax of bank deposits, including the creation of a "solidarity fund" of state, church and pension fund assets and the introduction of capital controls on its lenders to prevent capital flight when its banks are scheduled to re-open next Tuesday.

A banking bill is also being considered which would see the country's second-largest lender, the Laiki bank, split into "good" and "bad" assets. Rumors that the bank could be wound down prompted heated public protests in the Cypriot capital, Nicosia, on Thursday.

The Eurogroup of finance ministers released a statement on Thursday night, saying that it was ready to discuss any new proposals with Cyprus and was prepared to continue negotiations on an adjustment program with the country. It said it was ready to ensure the "stability of the euro area as a whole," the statement said.

A senior EU official was also reported as saying that the bloc was ready to see the island banished from the euro to contain damage to the wider European economy, Reuters reported.

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