The head of Iran's biggest bank resigned on Tuesday and chiefs of two privately-owned banks were set to be dismissed, the economy ministry website said, over a multi-billion dollar scam which has shaken the government.

The head of state-owned Bank Melli resigned and the heads of Bank Saderat and Bank Saman would be removed from their posts by the Central Bank of Iran, the website said.

The ministry said the management of the banks had to take responsibility for issuing letters of credit in the scam which the judiciary said amounted to some $2.6 billion - the biggest fraud in the history of the Islamic Republic.-Reuters