The 22-year-old joined Los Blancos from Real Zaragoza in 2015 but has failed to establish himself in the first team, and played only seven games last season because of injuries.

Vallejo would effectively become Wolves' first signing of the summer.

Forward Raul Jimenez and midfielder Leander Dendoncker both completed their expected permanent moves after loans.

Wolves boss Nuno Espirito Santo said on Wednesday he was "totally confident" the club would be adding to the squad this summer.

"We have time," he said. "We have to work and take the right decisions and do it, this is what we have to do."