London Olympic executives are set to announce a multimillion-pound sponsorship deal to provide welcome relief from the gloom of the credit crunch hanging over sport. It is understood that Cadbury will sign up to sponsor the 2012 Games in a contract that could be worth £20 million.

Executives would not confirm details last night, but it is thought that the world-famous brand will join the 2012 roster despite the tightening of finances that has sent a shudder through sports administrators around Britain. The ramifications of the credit crunch have not been felt fully and sport is braced for a welter of bad news as sponsors weigh up what they can afford.

Nowhere is the uncertainty greater than in the banks, which have traditionally been among the biggest spenders. Lloyds TSB, one of the most high-profile casualties, is a Tier One 2012 sponsor, which means that the bank is committed to about £80 million worth of backing for the London Games, plus at least £10 million in “activating” the sponsorship by adding the Olympic logo to its advertising and initiating schemes to cash in on the Olympic link.

There is confusion over what happens if the bank is merged with HBOS and the Lloyds TSB name is lost. Experts predicted last night that the newly combined HBOS-Lloyds TSB would maintain the sponsorship, although it may mean a substantial renegotiation, which could cost the bank even more.

It is also not known what strictures will be imposed by the Government as the most powerful shareholder in the nation's leading banks. Ministers allowed Northern Rock to continue sponsoring Newcastle United FC and Newcastle Falcons RUFC after nationalising the troubled lender, but some banks, such as the Royal Bank of Scotland (RBS), have far-reaching sponsorship deals across a number of sports.

Pippa Collett, the managing director of Sponsorship Consulting, said: “Banks would be making a mistake thinking short-term and pulling out of deals. They still need profile and customers, and sport remains an excellent vehicle for them.”

RBS executives confirmed last night that they have no plans to scale back and they are thought to be keen to renew their deal to sponsor rugby union's Six Nations Championship when their present contract, worth about £4 million a season, expires early next year. The most likely cutbacks at RBS could be money handed to individuals, such as the £1 million a year paid to Andy Murray, Britain's leading tennis player. Zara Phillips, the world champion equestrienne, also has a personal deal with the RBS.

The Williams Formula One team are facing an anxious time, with not only RBS as a title sponsor, but also the Baugur Group, of Iceland, another leading investor, in serious trouble.