AIB has formally announced the appointment of Bernard Byrne as chief executive.

He succeeds David Duffy who will step down as chief executive and executive director with immediate effect.

Mr Byrne’s “remuneration package will be fully in line with Government requirements,” the bank said.

State-owned AIB has been searching for a new chief executive since January, when Mr Duffy said he was leaving to join National Australia Bank's Clydesdale Bank.

The new chief executive is likely to lead the bank back into private ownership, with Minister for Finance Michael Noonan indicating the Government may start selling part of its 99 per cent stake in the group later this year.

Mr Byrne (47), a chartered accountant by profession, joined AIB in 2010 as group chief financial officer after working with the ESB, where he was the commercial director for international investments.

Since 2011, he has held a number of roles, successfully leading the retail, business and corporate segments.

He took up his current role as director of retail and business banking earlier this year.

Commenting on his appointment, AIB's chairman, Richard Pym said: "Bernard is the ideal candidate to succeed David Duffy and to lead the organisation forward."

“Having been one of the leading architects of AIB’s customer-led strategy over the last number of years, Bernard is very well positioned to ensure that the momentum created by David Duffy and the senior management team is maintained.”

“He is ideally suited to the task of continuing AIB’s delivery of its strategic objectives for customers and stakeholders,” he added.

Additional reporting by Bloomberg