FA agrees £420m loan with German bank, but work will not start on national stadium until deal is closed.
The FA will today announce that it has reached an agreement with a German bank to put £420m behind Wembley stadium, although the deal will not be finalised until August.

The decision by WestLB to lend the FA the money is a boost to the chaotic project, but a senior Wembley source said the talks were far from complete.

The source said: "The heads of terms between the FA and the bank have been agreed but there is still a long, long way to go until it is signed off. All the legal work still has to be done and until then anything can happen."

The source added: "Of course there could be hitches; it's like any other business deal. You can go all the way, spend months and months talking, but if you cannot reach a final agreement you walk away."

The source added that because of the continuing risk of the deal collapsing, work on the north-west London site would not start until it reaches financial close during the summer. However, some environmental work, including the removal of asbestos from the old stadium, may start earlier.

Today's announcement is significant because securing funding is one of five conditions set by the government before it will give the Wembley scheme approval. Another condition laid down by culture secretary Tessa Jowell last December was proof that the stadium did not cost substantially more than others throughout the world.

The heads of terms have been agreed but there is still a long, long way to go until it is signed

Wembley source

A confidential report written by QS Cyril Sweett for Jowell is believed to confirm that the scheme compares favourably with the likes of the Stade de France, Cardiff's Millennium Stadium and Stadium Australia. The overall cost of the scheme will be £715m, which includes lottery cash and FA backing.

QS Cyril Sweett was called in to examine the cost of the scheme in late February.

WestLB last week replaced Barclays, which had been in talks with the FA about a £300m loan. The WestLB package is believed to be more flexible than that offered by Barclays. A source said: "WestLB is offering a lump sum deal, whereas Barclays was offering a syndicated deal, divided into separate packages."

Despite the change in backer, the FA's £326m construction deal agreed by contractor Multiplex is still in place. One project source said: "The price is still there; it's not going to go away."

It is also believed that specialist subcontractor packages are now in place. Steel contractor Cleveland Bridge is understood to be examining designs for the steel arch spanning the stadium.