Finance Minister Michael Noonan has indicated that AIB's IPO could happen during 2017 as market conditions continue to improve.

"In order for us to proceed with the sale of any of our banking assets, we would need to be satisfied that the market is prepared to put a fair and reasonable value on the business, bearing in mind its current performance, its future prospects and the outlook for the Irish economy," he told the Dail.

The Minister added that bank shares are on the rise, citing the examples of Bank of Ireland and Permanent TSB shares appreciating by 52% and 18%.

He indicated that the IPO may take place in either May or June - but stressed that no time-frame for an IPO has been finalised and that the Government is in no rush to off-load these shares. Prior to the General Election, Finance Minister Michael Noonan said he was ready to trigger an IPO if Fine Gael returned to power.

"Certainly there's an indication that we might get the kind of values we would require but there are a number of events that would be necessary before we proceed, the issue of a dividend, obviously that would probably enhance value somewhat and then there's the annual returns of AIB which are due out in March," he added.

The Department of Finance announced in December that it has appointed Bank of America Merrill Lynch, Davy and Deutsche Bank as 'Global Coordinators' to assist in a potential AIB IPO. It is also seeking a public relations adviser to design a strategy for the offering.

During the financial crisis the State pumped €21bn into AIB - it now owns 99% of the bank. Mr Noonan added that the state will offload all of its banking assets in a "measured and careful manner."