Andrey Santos' Palmeiras loan talks break down

Talks between Chelsea and Palmeiras over the loan of midfielder Andrey Santos have collapsed, 90min understands.

The 18-year-old arrived at Chelsea from Vasco da Gama in January for £18m but failed to obtain a work permit and had been expected to return to his native Brazil on loan with Palmeiras until he obtained one.

Palmeiras were keen to take Santos, who shone for Brazil Under-20s at the recent South American Championships, but talks with Chelsea over the specifics of the deal have seen negotiations collapse.

Chelsea wanted to ensure Santos was released by Palmeiras for the Under-20 World Cup in May and also attempted to negotiate the freedom to terminate the deal and bring Santos back to Stamford Bridge in the summer, midway through the Brazilian season.

Palmeiras declined to agree to those terms and now Santos is expected to return to former employers Vasco da Gama, who are back in Brazil’s top flight after earning promotion with the teenager in their ranks last season.

Santos is prepared to return to Vasco, who sit fourth in the league after the first eight games of the season, and talks between the two clubs are underway.

Elsewhere, Chelsea remain locked in negotiations for another South American starlet, 15-year-old Ecuadorian Kendry Paez.

Paez, the latest prospect to emerge from the famous Independiente del Valle youth setup, is widely seen as one of the continent’s top young talents and Chelsea are among the clubs pushing to secure his signature before he is eligible to move to Europe at 18.