DUBLIN (Reuters) - Ireland's government will select bookrunners and co-lead managers to assist a potential share sale of state-owned Allied Irish Banks (>> Allied Irish Banks PLC) (AIB), it said on Friday, in a further signal that it could launch an IPO by May.

Finance minister Michael Noonan said on Thursday following the bank's full-year results that AIB's performance supported the view that 2017 is an appropriate time to consider pushing ahead with a planned 25 percent stake sale in the bank.

Last month, Noonan raised the possibility of doing so as early as May as markets improve.

Ireland's finance department said it had initiated a tender process to pick bookrunners and co-lead managers who would assist with the marketing and sale of shares in AIB at the time of an initial public offering.

Bank of America Merrill Lynch (>> Bank of America Corp), Deutsche Bank (>> Deutsche Bank AG) and Davy Stockbrokers were appointed as global coordinators in December.

Last year, Ireland pushed back the timetable for selling its stake, citing unfavourable market conditions, but Noonan has said rising bank share prices suggest he might get the value needed while the bank's chief financial officer said on Thursday that conditions at the moment are "pretty receptive".

The 99.9 percent state-owned bank became the first domestic-owned Irish lender to restart dividends since the financial crash almost a decade ago, proposing a 250 million euro payment on as it reported strong margin and capital growth during 2016.

(Reporting by Padraic Halpin; editing by Susan Thomas)