The State is no longer the largest shareholder in Bank of Ireland, after it sold a further tranche of its shares in the lender.

In a notification to the stock market this afternoon, the bank said the Minister for Finance's stake had been reduced from 7.97% to 6.93% following the latest transaction.

The development means global investment manager Blackrock is now the largest shareholder in Bank of Ireland.

As of the middle of November, it owned 6.95% of the bank.

"In just over six months, the State holding in Bank of Ireland has halved. As of today, the State is no longer the largest shareholder in the Group," Francesca McDonagh, chief executive of Bank of Ireland said.

"The ongoing sale process is a positive one for Irish taxpayers, the Irish economy, and Bank of Ireland," the CEO said.

"We welcome its momentum, and look forward to being the first Irish bank to return to full private ownership during this year," she added.

Last June, Minister for Finance Paschal Donohoe said the Government would begin selling part of the State's then 13.9% shareholding in the bank over the following six months.

That process was due to conclude in January, but in November the minister announced that the deadline would be extended to May 2022.

In total, the State put €4.7 billion into Bank of Ireland during the financial crisis, with the initial investment coming in early 2009.

Since then, Bank of Ireland has returned more than €6 billion to the State, making it the only Irish bank to have repaid the Irish taxpayer for its support.

In December, Mr Donohoe announced similar plans to begin selling down some of the State's 71.12% stake in AIB over the next six months.

Addressing the Oireachtas Committee on Finance, Public Expenditure and Reform, and Taoiseach, the Minister for Finance said Government believes banking is an activity that should be provided by the private sector and that taxpayer funds which were used to rescue the banks could be used in better ways.

"My announcement in relation to AIB is further progress to the Government's policy of monetising its remaining stakes in the banks and returning them fully into private ownership," Paschal Donohoe told the committee.

He said the share trading plan was the first activity around AIB shares since 2017.

"I expect the pace of share sales to be slower than what we’ve seen in the Bank of Ireland, but it is important that we make further progress on what will be a journey over many years. I will keep other sale options open, including larger block trades or directed buybacks from AIB itself should these opportunities present themselves," he said.

"In terms of usage of the sales proceeds, it is important to highlight that no new income will be generated from the plan and the transaction should be viewed as a switch in State assets from shares to cash."

Socialist Party TD, Mick Barry, said he believed the sale of the shares was a step towards the full privatisation of the bank and that he does not think that moving towards a for-profit banks is in the interests of the majority of people.

He said that at a time when the State has need for a powerful state bank for investing in health, housing, climate action and education, it doesn't make sense.

Sinn Féin finance spokesman, Pearse Doherty, said he would not sell AIB.

He said the last time it paid dividends it was €329m in 2019 and €232 the year before that.

There is a value in keeping AIB, he stated, and a value in the shareholding itself.