The Minister for Finance Paschal Donohoe said the State has sold off another part of its stake in AIB to institutional investors for €396.6m.

The stake sale is part of the Government's drive to sell down bank stakes acquired during the financial crisis.

The State has now reduced its stake in AIB from 62% to about 57%.

This most recent placing marked the second time in five months that it has sold a larger chunk of shares in the bank in one go.

In a statement, the Finance Minister said the placing price was €2.96 per share and the gross proceeds from the sale of the shares will be €396.6m.

This money will be returned by the Ireland Strategic Investment Fund to the exchequer.

Mr Donohoe had announced his intention to sell the stake yesterday.

The Minister for Finance said he has undertaken not to sell further shares in AIB for the period of 90 calendar days following the completion of the placing without prior written consent.

Minister Donohoe said that today's sale was well received by a large number of international institutional investors.

"As I have previously stated, this Government believes that banking is an activity that should in the main be provided by the private sector and that taxpayer funds which were used to rescue the banks should be recovered and used for more productive purposes," Mr Donohoe said.

"As today's news shows, we continue to make progress in achieving this goal," he added.

Colin Hunt, AIB Group's chief executive, said AIB very much welcomed the decision and subsequent transaction undertaken by Mr Donohoe, which has led to a further divestment of the State's shareholding in AIB Group to about 57%.

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

Last December, Mr Donohoe announced he was beginning a process to sell down a portion of the State's shareholding in the bank over the following six months.

At that point, the State still owned 71% of the lender.

In June the Government raised €305m from the sale of a block of 5% of the bank, bringing its shareholding to 63.5%.

It then paused the process, but in September the department said it was to resume the share trading plan.

It said the plan would end no later than 24 January 2023, unless further extended by the Minister, and no more than 15% of the expected aggregate total trading volume in the bank would be sold over that period.

The State pumped €64 billion into the country's banks just over a decade ago following a huge property crash.

It sold the last of its shares in Bank of Ireland in September.

Its stake in Permanent TSB is to fall to 62% from 75% after NatWest took a minority stake in the bank following the completion of its sale of €5.2 billion of Irish mortgages to PTSB yesterday.

Shares in AIB were lower in Dublin trade today.