It is expected that the buyback will be completed shortly after AIB’s annual general meeting on May 1, 2025.

“As part of AIB's FY2024 annual results the bank announced that discussions were underway with the Department of Finance for a further €1.2bn directed share buyback and I can now confirm that I have agreed in principle to participate in this buyback on a fully directed basis (subject to shareholder approval and market conditions)," said Mr Donohue. 

"The successful completion of this transaction will see a further €1.2bn returned to the State which will be in addition to the around €100m in dividends due to be received in May 2025 while also allowing the State to further reduce its shareholding in AIB and get closer to exiting its position in the bank. 

"Further details in relation to this transaction will be announced in due course.”

The State’s shareholding of AIB has decreased significantly in the last two years, falling from 71% at the beginning of 2022.

The State currently has a shareholding in AIB of just under 12%, with this buyback transaction having the potential to reduce the State’s shareholding by a further 8%.

AIB posted a record annual profit haul of €2.35bn in March after tapping into the surge in European Central Bank interest rates that has underpinned income, while facing little competition domestically to offer attractive deposits.

Speaking earlier this month, AIB CEO Colin Hunt said the bank had paved a "clear path to return to full private ownership this year."