Manchester City and Schalke continue to discuss a deal involving Matija Nastasic.
The 21-year-old center back has fallen out of City's plans this season.
The German side are looking for an initial loan deal with a view to a permanent €10 million (£8 million) move in the summer but City’s Financial Fair Play restrictions mean that they are operating with a relatively limited budget of around €16.5 million (£13 million) and they know that they need to sell in order to buy in January.
Schalke boss Roberto Di Matteo confirmed on Sunday that he is trying to sign Nastasic, telling attendees of a fan event: “Yes, we want him, but we aren't the only ones.
“Nastasic is an interesting player, very talented and, despite his young age, already experienced but he still is a Manchester City player."
AC Milan is also interested in Nastasic.