The State will recover everything it invested in Permanent TSB "in due course", according to the Minister for Finance.
He was speaking after the bank raised €400m in a share offering priced at €4.50 per share, valuing the bank at €2bn.
The Government sold an additional €98m worth of shares alongside the bank, bringing its stake in the lender to 75%.
Doing so satisfied the market requirement for at least 25% of a company’s shares to be made available to traders as part of a public offering.
The State invested €4bn into Irish Life and Permanent following the banking collapse, but recouped around €1.1bn through the sale of assurance company Irish Life.
Following today's share sale, there is approximately €2.2bn outstanding from the State's investment, with its remaining stake worth around €1.5bn.
PTSB sold the shares in order to meet the requirements of a restructuring plan agreed with the European Central Bank, which involves it plugging a capital hole identified in the bank stress tests last year.
The bank also issued a €125m Tier 1 bond today, securing a rate of 8.625%.
The sale brings to €525m the total raise by the bank today, after it earlier issued a €125m Tier 1 bond.
Speaking about the sale, Permanent TSB CEO Jeremy Masding there was “exceptional” levels of interest from investors.
"They know we continue to have challenges but they are confident that we can overcome them and grow a stronger, profitable and vibrant franchise in the market here.”
He said the bank would now aim to deliver value to its shareholders by building and delivering "great products and propositions that both deliver a return to our investors and deliver real benefits to our customers.”