As confirmed by the European Commission on Tuesday, the European Union has agreed to offer its support to efforts initiated by the Allied Irish Banks to raise private capital, in return for cutting back on the state aid that is currently given to aid troubled banks.

"In the Commission's approach to restructuring aid for banks, it is possible for the period of coupon restrictions to be adjusted if this would favor private capital raising that would in turn reduce the amount of state aid. The Commission will support efforts of AIB to raise private capital, including measures aimed at providing adequate remuneration to the government's preference shares without necessarily diluting existing shareholders", it was officially announced.

A restructuring plan to the EU was submitted by the bank last month, on November 13, after it was injected with 3.5 Billion Euros worth of state aid, and talks with the bank which had led the Commission to do away with December's coupon payment were "without prejudice to the respective positions of other Irish bank".

Currently the bank, shares of which fell by 5 cents, or 3.2%, to 1.50 Euros in the latest trading, is holding talks with the EU to allow it to "resume declaration and payment of dividends and distributions as normal".