Department of Finance officials said it was a good time for a €500m AIB share buyback deal with the state set to get a strong price for their stake.
A submission for Finance Minister Jack Chambers said the direct deal meant the Exchequer would avoid having to give the discount that would factor into a further sale to institutional investors.
The submission said there had been some volatility in global equity markets but that this had since subsided.
"AIB's share price is on [an] upward trajectory (524 cent at the time of writing)," officials wrote in the briefing, which was prepared in late August.
It said the buyback of around half a billion worth of shares would reduce the state's stake in the bank to roughly 21%.
The submission also said it would be worthwhile to approve the deal prior to a meeting of the European Central Bank on September 12.
"There is a high likelihood that a further rate cut will be announced at that meeting," it said.
"Given AIB is a rate-sensitive bank, a rate cut announcement is likely to have a negative impact on AIB's share price around that time," it added.
Officials said they would be closely monitoring the bank's share price with a view to signing off on the buyback in late August or early September.
The deal was announced on September 2 with AIB saying it represented "another important milestone in the process of repaying the taxpayer for their support."
A post-sale submission for Minister Chambers said the buyback had taken place at a price of just over €5.44, "the highest AIB closing price since February 2018."
It said the total amount recovered by the state from its investment in the bank had now reached a sum of €16.6 billion.
The submission said: "The proceeds from this transaction will be held within the Irish Strategic Investment Fund (ISIF) while the Minister examines how best to use them for the benefit of the State."
It said market reaction to the deal had been "very positive" and that a drop in the value of AIB shares in the days after was part of "general market weakness amid economic concerns in the United States."
Officials also explained how a total of €29.4 billion had been invested in AIB, Bank of Ireland and Permanent TSB during the financial crash.
"To 5th September 2024, circa €26.1 billion has been recovered in cash by way of disposals, investment income and liability guarantee fees," the submission said.
"The investments in the remaining banks are currently valued at circa €3.36 billion meaning the State is just above break-even on a net basis on its investments in the three banks," it added.
Asked about the records, which were released under Freedom of Information, the Department of Finance said they had nothing further to add to the contents.
Reporting by Ken Foxe
