ST PAUL's Cathedral in Nicosia, the capital city of Cyprus, is joining churches across the island to help families affected directly, or indirectly, by the financial crisis on the island. Although only those with savings of more than €100,000 (about £84,000) are facing cuts as part of the bailout deal with international creditors, the collapse of the financial-services sector is expected to lead to widespread unemployment and the demise of scores of companies.

The Greek Orthodox Church of Cyprus, which alone faces losses of an estimated €100 million in capital deposits, has set up food banks to help congregants who are suffering from the effects of the crisis. The Red Cross is providing a similar service for migrant workers.

The Dean of St Paul's, the Very Revd John Tyrrell, said that a donations box had been placed at the back of the cathedral, and "we are now feeding an increasing number of families through that. There are definitely more people coming to my door asking for help than before." In general, members of the Anglican congregation in Cyprus "are travelling less, and going out less. People are retrenching, and are generally very cautious. Everywhere you see the signs of the crisis - already about a third of shops in central Nicosia have closed down."

The tight restrictions on bank transactions are leaving individuals, as well as businesses, facing liquidity problems. Dean Tyrrell said that he was among those who had not been paid at the end of last month, because banks were not processing standing orders. "It will work itself out for us all in the end," he said, "but not without hardship."

The biggest worry, he said, was for retired members of the congregation who had sold property in the UK and had moved cash to Cyprus: "They are taking a very bad hit: €100,000 is not much to have in the bank if you sold your home in England, and are expecting to live off the proceeds."

Those members of the congregation who have business interests also face difficulties. Dean Tyrrell spoke of one man who imported chemicals, who had "a large pile of cheques post-dated between now and Christmas, that he can't cash. Some will be honoured, but many more won't, because many of his customers will have gone out of business by the time he is able to cash the cheques."

Cyprus has enjoyed several decades of unalloyed prosperity, built partly on tourism, but more significantly on the booming banking and financial-services sectors. Exposure to Greek debt revealed the huge extent to which the island's economy relied on these. The bailout, at the insistence of the Troika - the European Commission, the International Monetary Fund, and the European Central Bank - will trim these sectors, and will almost certainly cause the part played by Cyprus as an offshore financial centre disappear.

The island's Orthodox Church - the biggest landowner in Cyprus, with extensive business interests - last month offered to put its entire assets at the disposal of the government to help keep the island afloat. But the Troika rejected all forms of cash bailouts, insisting instead on the downsizing of the banking and financial sectors as a condition for international help.

Archbishop Chrysostomos II said, after the terms were finally agreed: "Some people will lose their jobs; the hungry will be multiplied; and the Church has to take care of the people."