AIB has accepted Santander's offer to buy its stake in Bank Zachodni.
The move comes days after Polish authorities approved the sale of AIB's 70 per cent stake in the bank.
That put AIB a step closer to almost complete State ownership.
When the sale is complete the Government’s convertible non-voting shares will be changed to ordinary shares giving the State 92.8 per cent of the shares in the bank.
The transaction is expected to be completed on April 1st.
AIB has sold off a number of assets, including its stake in Bank Zachodni and its interest in US-based M&T, in a bid to meet capital ratios laid down by the Central Bank. The sales have raised about €4 billion.
Spiralling losses have raised AIB's capital hurdle, first to the €7.4 billion level set in March, then to €10.4 billion in September and by a further €5.3 billion in November. This left the bank with no alternative but to seek further cash from the State, making effective nationalisation inevitable.
As part of the EU/IMF bailout for Ireland, the Central Bank said AIB must meet a minimum capital ratio of at least 12 per cent before the end of February. That deadline was extended after the Government delayed a planned capital injection into Irish banks until after the election.
