Is there any bank/financial institution somewhere in the world that has embraced Bitcoin? Not that I'd deposit my money there, I'm just curious to know it.
I think no bank accepts Bitcoin because its activities are anonymous and banks are always looking to make their money transparent. Hence they only accept indirectly as you use the exchange to send fiat to your bank. Besides, the price of Bitcoin is unstable which makes banks not willing to trade or hoard it, so they are not ready to accept Bitcoin.
That is one more good reason which is the truth to why they wont accept it.
I, as not a big holder aee having problems with the waves of bitcoin and what else could happen to those banks thinking if they accept it many might store it to them and that would be a big problem.
Insurance. Banks are holding this insurance which might be applied by a customer for his/her bitcoin be protected which gives them more risk.
Can they neglect an application for insurance? No. That would be a breach to their customer service which can make it worst.