Bahrain’s central bank has decided to close down an Iranian-owned lender in the tiny Persian Gulf country, the bank says.

The central bank said it is taking steps to shut down Manama-based Future Bank, a joint venture between Iranian Bank Saderat and Bank Melli and Bahrain's Ahli United Bank.

The move comes in the wake of Bahrain’s decision earlier this month to cut diplomatic ties with Iran in deference to Saudi Arabia which it regards as a patron.

Last year, the Bahraini central bank’s regulator put Future Bank under its administration along with Iran Insurance Company. At the time, the regulator said the moves were to “protect the rights of depositors and policyholders,” Reuters reported.

Financial institutions are under state control in Bahrain as are other aspects of life. The kingdom makes occasional accusations against Iran in the face of protests by its Shia majority community which complains of marginalization.

Tensions, however, came to a head earlier this month when Bahrain fell in line with Saudi Arabia to cut relations with Iran following angry protests against the kingdom’s execution of a prominent Shia cleric.

The spat sparked speculation that the countries might terminate their bilateral businesses. While official trade between the countries is paltry, private entities have sizable enterprises within each other’s territories.

Saudi Arabia’s largest food producer Savola's shares plunged after Foreign Minister Adel al-Jubeir was quoted as saying that Riyadh was severing "all commercial relations" with Iran along with diplomatic ties.

Savola, however, has said it would maintain business in Iran and a leading Iranian trader has announced that foreign businesses were safe.The Saudi holding has a controlling 90% stake in an Iranian company which accounts for 40% of Iran’s edible oil market.

Bahrain's central bank has not given any reasons for its decision to close Future Bank, while the fate of the Bahraini branch of the Iranian insurer also remains in balance.

Future Bank's assets stood at 569.4 million dinars ($1.51 billion) at the end of September 2015, according to a financial statement on the website.

By Press TV