Spain’s second largest property company, Inmobiliaria Colonial is in talks with two of its banks about becoming shareholders in a bid to reduce its credit liabilities.

Shares in the company, which was recently subject to an aborted sale to Investment Corporation of Dubai, were frozen yesterday pending an announcement.

At lunchtime today, Colonial lenders Banco Popular and La Caixa said they were considering buying into the company, enabling shares to continue trading again.

After the announcement, shares in Colonial rose by 8.7% to E1.

The news comes just 24 hours after Colonial said it would seek buyers for its 84.4% stake in French property company Societe Fonciere Lyonnaise in a bid to reduce its E9bn (£7.1bn) debt position.

Spanish rivals Metrovacesa and Gecina are rumoured to be evaluating bids for SFL, which has assets valued at close to E4.1bn (£3.2bn).

Colonial has been a mainstay in the news since last December, when major shareholder and founding ex-chairman Luis Portillo quit the company amid fears the company would be unable to service its debts.