Real Madrid have confirmed Sergio Canales is staying at Valencia this season.

The 21-year-old spent last season at the Mestalla on a temporary basis after a two-year loan deal was agreed.

The deal contained a double clause which allowed them to sign Canales permanently for a fee which was reported at the time to be 12million euros, and granted Real a repurchase option reported at 18million euros.

Los Che have now exercised their right to buy Canales, with the player reportedly signing a five-year contract.

A statement on Real's website confirmed: "Real Madrid CF and Valencia CF have concluded the agreement for the transfer of Sergio Canales. Real Madrid CF reserves a right of repurchase."