UPDATE 3-Irish government to begin phased exit from Bank of Ireland holding

* Trading plan to become operational in the coming days

* Government says it will not sell below undisclosed price

* No imminent government plans to sell AIB, PTSB shares
(Adds finance minister on bank exits, profit)

By Padraic Halpin

DUBLIN, June 23 (Reuters) - Ireland's government will begin
to sell down part of its 13.9% shareholding in Bank of Ireland
over the next six months, Finance Minister Paschal
Donohoe said on Wednesday, marking the state's first sale of any
bank shares since 2017.

Ireland pumped 64 billion euros ($76.3 billion) or almost
40% of its annual economic output - into its banks a decade ago
after a property crash had left its now mostly state-owned
banking sector requiring the biggest state rescue in the euro
zone.

Bank of Ireland was the only lender to avoid majority state
ownership and the government has already recouped more than the
4.7 billion euros it originally invested in the bank. Donohoe
said the announcement marked the start of a phased exit from the
country's largest bank by assets.

Citigroup was appointed to manage the sale and instructed to
target that up to, but no more than, 15% of expected aggregate
total trading volume in the bank be sold over the duration of
the trading plan, Ireland's finance ministry said.

The state's shareholding is worth close to 700 million euros
and will not be sold below a certain undisclosed price per share
which will be kept under review, the ministry said.

Bank of Ireland shares were 4.5% lower at 4.3 euros by 0735
GMT.

The shares are up 31% so far this year but 45% lower than
they were in 2018, before a Europe-wide slump in bank shares.

The government's trading plan will become operational in the
coming days and can be renewed at the minister's discretion
after six months.

The British government sold down its remaining 24.9% stake
in Lloyds Bank from 2014 to 2016 in a similar process.

Ireland last recouped part of the taxpayer funds ploughed
into its lenders when it cut its holding in Allied Irish Banks
(AIB) to 71% from 99.9% with a 2017 IPO. It also owns
75% of the smaller mortgage bank permanent tsb.

Of the 29.4 billion euros put into the banks still trading,
19.2 billion has been recovered by way of disposals, investment
income and liability guarantee fees. The remaining shareholdings
are currently valued at 5.3 billion euros.

Donohoe acknowledged that the competitive dynamic for Bank
of Ireland had "completely changed" following the planned exit
of Britain's Natwest and Belgium's KBC from the
Irish market and that this would be a factor in the sale.

He said it was still possible that the state could make a
profit through the sale of its holdings in the banks that are
still trading, through there were no imminent plans to sell
shares in the other two lenders.

($1 = 0.8384 euros)
(Reporting by Padraic Halpin; Editing by Andrew Heavens, Jason
Neely and Emelia Sithole-Matarise)