Michel has been a long-term target for the Premier League new boys and he impressed during Gijon's pre-season friendly against Blues last weekend.
Blues boss McLeish remains optimistic of bringing Michel to St Andrew's and hopes the board will allow him to spend more money.
"We have made some contact and there are talks going on," McLeish said. "But it depends on the finances.
"We have spent more than the designated budget agreed at the end of the season.
"I had to do that, the board have seen the difference between last time in the Premier League and now.
"I would still like to enhance the squad further, whether the board can see themselves fit to do that, it is their decision.
"He has a lovely touch on the ball and I believe he could be a good asset, but we will be guided by the board's decision."
Meanwhile, Birmingham have received international clearance for Gregory Vignal and the on-loan full-back is in the squad for Sunday's opening game at champions Manchester United.