Former Real Madrid manager Alvaro Arbeloa has set about building his new Fulham squad in his image following his appointment as Marco Silva’s successor.
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According to Fabrizio Romano, the Premier League side are now closing in on a deal to sign midfielder Palacios, 21.
The youngster was given his first-team Real Madrid debut by Arbeloa having worked his way through the club’s youth ranks.
Palacios went on to make five substitute LaLiga appearances playing a grand total of 81 minutes as Real Madrid finished second.
It’s understood that the Spanish giants want to retain control of the player’s future, meaning they will likely include some sort of buy-back clause in the deal.