AIB BANK HAS received approval from the European Union banking regulator to start paying €3.3 billion back to the Irish State.

The board of AIB group this morning announced the Single Supervisory Mechanism (SSM) has approved a number of capital actions.

This ‘capital reorganisation’ will see the bank partially redeeming 2009 preference shares, resulting in a €1.7 billion repayment to the State. A further repayment of €1.6 billion will also be made as a result of the scheduled maturity of contingent capital notes.

The group said it was working with the Minister for Finance to finalise terms of the repayment which is also subject to shareholder approval. CEO Bernard Byrne said this will put the group in a position to return to private ownership over time.

Commenting on the announcement this morning, Minister Michael Noonan said:

With AIB back to profitability and recording strong growth in lending to Irish businesses and consumers, I am confident that the bank can play a vital role in facilitating the continued growth in the Irish economy.

“The changes announced today also lay the ground-work for the Irish taxpayer to ultimately recover the full value of their €20.8 billion investment in AIB,” he added.