The Cabinet will this morning discuss legislation compelling AIB to withhold around €40m worth of bonus payments to its staff.
Last night, the Finance Minister Brian Lenihan wrote a letter to inform officials at AIB that the Government would not fund the recapitalisation of the bank if the controversial bonuses were paid.
AIB says it has been trying to get out of paying the bonuses. The AIB Board has now welcomed the Minister's intervention.
Last week, the recapitalised bank announced that for legal reasons it was going to make the payments, which averaged more than €16,000, to 2,400 executives.