Allied Irish Bank said today it had agreed not to make some payments on some securities while the European Commission assesses its restructuring plan.
The European Commission told AIB not to make the payments on its Tier 1 and Tier 2 capital instruments unless it was legally bound to do so.
AIB said it had agreed to the request, which triggers a "dividend stopper" provision. This means AIB will not pay dividends on its junior share capital, which includes ordinary shares and the Government's €3.5 billion stake in the bank issued to the the National Pensions Reserve Fund Commission (NPRFC).
The Government took the stake in AIB as part of a recapitalisation of the bank in May.
The bank earlier said if the dividend stopper remained in force, it would be precluded from paying the dividend due on the preference shares in May, which could lead to the Government gaining a larger stake in the bank.
"Under these circumstances, in accordance with the terms of the preference shares, the NPRFC would become entitled to be issued, at a date in the future, a number of ordinary shares related to the cash amount of the dividend that would otherwise have been payable," the bank said in a statement.
However, in a statement today, the Commission said it was possible for the period of restrictions to be adjusted.
"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 favour private capital raising that would in turn reduce the amount of state aid," it said.
"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 added.
Shares in AIB fell on the Dublin market this afternoon, dipping 4 per cent to €1.48