According to The Athletic, the French international defender has been deemed surplus to requirements at the Santiago Bernabeu as the club undergoes a major squad overhaul following the appointment of Jose Mourinho.
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With several arrivals and departures expected, Mendy is among the players likely to move on.
Mourinho is understood to have requested a versatile left-back capable of playing at centre-back, prompting Madrid to strengthen in that area.
The club have recently secured Marc Cucurella from Chelsea, further limiting the 31-year-old’s prospects, especially after he made just five La Liga appearances last season.