DUBLIN, Dec 15 (Reuters) - Ireland's PTSB was cleared by regulators on Friday to resume dividend payments for the first time since 2008, a decision the majority state-owned bank said was a "landmark" moment that would enhance its investment case.

Shares in the lender rose 5.7% after the Irish central bank removed the so-called dividend blocker introduced in 2016 as part of the bank's post-financial crisis rescue plan.

"The removal of the dividend blocker is a landmark event for PTSB. It acknowledges the enormous progress which has been made by the bank over the past decade," PTSB CEO Eamonn Crowley said in a statement.

"It reflects the fact that PTSB now occupies a key position in the Irish banking landscape, and it significantly enhances the investment case for existing and potential investors in the bank."

PTSB was effectively nationalised following Ireland's post-2008 banking crisis, split from its profitable life insurance arm and forced to shed a significant amount of assets.

However, it has been transformed into a much larger player in the last year after buying 6.75 billion euros ($7.4 billion) of loans from NatWest when the British lender shut its Irish unit, and also benefiting from the exit of KBC.

The home loan focused bank has become more profitable as a result and taken a 21% share of the mortgage market. Like Ireland's two other lenders, it recently raised 2023 earnings guidance on the back of higher interest rates and less competition.

The Irish state holds 57.4% of PTSB and NatWest has a 11.7% shareholding after they sold a combined 10% stake in the bank in June, the first time since 2015 that the government offloaded shares in the lender. ($1 = 0.9162 euros) (Reporting by Padraic Halpin, editing by Sarah Young and Sharon Singleton)