The Government has raised €305m through the sale of a 5% stake in AIB as it cut its majority shareholding in the bank to 63.5%, the Department of Finance said today.

The Government has been gradually selling shares in AIB since the start of the year through a share trading plan.

It announced last week that it has raised €161m by reducing its stake to 68.5% from 71.1% over the past six months.

The placing, which began after the market closed yesterday, was priced at €2.28 a share compared with an average price of €2.32 achieved during the more gradual sell down.

AIB shares closed at €2.44 yesterday.

The State ended up with 99.9% of AIB after bailing out the entire Irish banking sector following a massive property crash more than a decade ago.

Before this year the Government last sold shares in the bank in an initial 2017 IPO that raised €3.4 billion at €4.40 per share. It has used any bank sale proceeds to pay down a national debt that ballooned after the 2008 financial crisis.

Last week, Minister for Finance Paschal Donohoe said he was extending AIB's share trading plan until August. The trading plan had been first announced in December

AIB Group chief executive Colin Hunt said the bank very much welcomed the decision and subsequent transaction undertaken by the Minister for Finance which has led to a further divestment of the State's shareholding in the bank.

"It is an important development in the process of returning the State's investment in the Group and a normalisation of the share register," Mr Hunt said.

"AIB owes the Irish taxpayer an immense debt of gratitude for its support during the financial crisis," he said.

"We remain focused on our strategy to grow and strengthen the Group to ensure we continue generating sustainable returns for all our shareholders," the CEO added.

In a statement, the Minister for Finance has undertaken not to sell further shares in AIB for 90 calendar days following the completion of the placing without prior written consent.

Goldman Sachs and Goodbody Stockbrokers were the joint bookrunners for the stake sale.

The Government is also reducing its stake in Bank of Ireland, the country's largest lender by assets, to below 3% through a share trading plan over the last year.