Ukraine's largest bank has temporarily closed branches in separatist-held Donetsk and Luhansk, saying it could no longer carry out cash transactions in regions riddled with crime that could "threaten the lives" of its workers.

Pro-Russian separatists targeted Privatbank after its co-owner, billionaire Igor Kolomoisky, was appointed head of the nearby Dnipropetrovsk region by the new government and swiftly announced a $10,000 bounty on the heads of Russian "saboteurs".

Rebels, who say they want independence from Kiev, set fire to a branch in the town of Mariupol in the Donetsk region late on Saturday and raided a security truck last week in Horlivka, south of the region's main rebel stronghold.

"In the current circumstances, we cannot and do not have the right to make people go to work in the Donetsk and Luhansk regions, where armed people break into bank branches and seize security vans in the towns," Privatbank said in a statement.

Reuters