Rising interest rates were positive for Irish banks and meant time was right for state to sell another part of its stake in AIB

Interest rate hikes by the European Central Bank had been “positive for Irish banks” and meant the timing was right for the state to sell more of its share in AIB, according to Department of Finance documents.

In submissions to Minister Paschal Donohoe, department officials said investor appetite for AIB had increased “notwithstanding lingering concerns” of a recession coming in Europe.

They said feedback from investment banks suggested the state could easily sell a stake of between €300 and €400 million in AIB at a much better price than in the most recent previous share offload in June.

A submission said: “The recent ECB rate increases [are] positive for Irish banks as they are among the most rate sensitive banks in Europe.

“The consolidation of the Irish banking sector is driving growth for the remaining banks while there is continued earnings momentum from improved operating leverage.”