Chelsea are expected to complete the permanent signing of Mateo Kovacic for a fee in the region of £40 million.

The Blues are understood to have agreed the deal with Real Madrid, after Kovacic spent last season on loan at Stamford Bridge.

Chelsea are able to recruit the 25-year-old permanently despite their two-window Fifa transfer ban due to the terms of the original loan deal.

Kovacic arrived at Stamford Bridge last summer on a one-year loan with Chelsea retaining the option to buy at the end of that stint.

And with the Croatia midfielder still registered to the Blues, the west London club are able to push through his full transfer.

Kovacic’s continued presence at Stamford Bridge will offset Ruben Loftus-Cheek’s extended absence as the England midfielder continues to recover after achilles surgery.

Kovacic’s old club Inter Milan had expressed interest in taking him back to Serie A, but the 52-cap Croatia star wanted to stay at Chelsea.

Frank Lampard continues to inch closer to a return to Stamford Bridge as manager.

The 41-year-old’s deal to replace Maurizio Sarri as Blues boss is understood to remain on track.

Lampard’s strong impression at Derby in his maiden managerial campaign has marked him out as the preferred choice to replace Sarri, who has returned to Italy with Juventus.