Bank of Ireland has redeemed the €1.3 billion in preference shares that were held by private investors in a move that clears the path for it to resume paying dividends to shareholders, probably in 2017.

This move had been flagged by the bank on November 23rd.

The preference shares were originally issued on March 31st 2009 to the Government as part of the bank’s bailout by taxpayers.

In December 2013, the bank facilitated the sale by the State of the shares to private investors as part of a €1.9 billion capital package and committed not to redeem them prior to January 1st 2016.

The shares gave the investors an annual dividend of 10.25 per cent, payable on February 20th each year. Redeeming them will save the bank €133.35 million a year.