UPDATE 4-Banks start swapping debt for Colonial stakes

(Adds Portillo)

By Jane Barrett

MADRID, April 25 (Reuters) - Banks that lent Colonial's main shareholders $3 billion signed deals to swap debt into shares in the Spanish property company on Friday, beginning a new chapter in the troubled real-estate sector.

Colonial's former chairman Luis Portillo said he had transferred shares equivalent to 24.58 percent of Colonial to banks including La Caixa and Banco Popular, leaving him with about five percent.

Several Spanish property groups are in debt restructuring talks with creditors as house sales slump after a 10-year boom, sucking dry the cash flow they need to pay off the loans they took out to buy land and other companies in the good times.

The Colonial deal is the first in which banks will take direct stakes in a company rather than work out waivers, new conditions or longer maturities on debt.

La Caixa and Popular -- Portillo's biggest creditors -- led the banks' debt talks and have said the lenders could pool the shares they take as collateral in a syndicate so they have a strong voice at the company.

Portillo and fellow shareholder Luis Nozaleda control 42 percent of Colonial, almost all of which was used as collateral for loans, but the syndicate will group together less than 30 percent, so it is not forced to make a full takeover bid.

La Caixa, which used to own almost 40 percent of Colonial until Portillo bought it in 2006, will end up with 5.4 percent of the company in part payment for a 161.3 million euro loan.