Bank of Ireland said today that the European Commission indicated the bank should not make interest payments on some of its debts pending an assessment of its restructuring plan.
The commission said the bank should not make coupon payments on tier one and upper tier two capital instruments "unless under a binding legal obligation to do so".
The decision triggers a "dividend stopper" on the securities for a period of a year.
The coupon restrictions would mean that the Government would not be paid the €250 million dividend due to be paid on the stake it took in the bank in as part of a recapitalisation in May last year.
This could mean the Government would end up with a larger stake in the bank, as Bank of Ireland would have to pay the cash amount of the dividend in the form of ordinary shares.
"The bank is, however in ongoing discussions with the Department of Finance and the EC on this and other related matters as part of our overall engagement on the Bank's restructuring plan and accordingly, this outcome is not certain," Bank of Ireland said in a statement.