The State will have a 15.7% stake in Bank of Ireland on Monday.
The Department of Finance and the bank have issued statements this evening confirming that €250m worth of ordinary shares will be issued to the National Pensions Reserve Fund.
It follows the Government's investment of €3.5bn in preference shares last year to shore up the bank's capital position.
The shares are being issued in lieu of a cash payment - which has been blocked by the European Commission while Bank of Ireland's restructuring plan is under consideration.
"As advised to stockholders at the Extraordinary General Court on January 12, 2010, Bank of Ireland is actively exploring a range of options, with a view to optimising the capital position of the bank," said a Bank of Ireland statement.
"These options include access to the private capital markets. It is the bank’s intention to conclude on these options after the bank has further clarity on the outcome of its discussions with the EU regarding its restructuring plan and the impact of Nama.
"As part of this overall capital plan, and in the context of wider discussions with the state, the bank is continuing to work with the state and the EU, including positioning the state shareholding in the bank at a level which facilitates possible access to private capital sources.
"The bank acknowledges the ongoing state support."