The 22-year-old currently finds himself behind Joe Hart and January signing Shay Given in the pecking order at Eastlands.
The Denmark Under-21 international is thought to be eager to get some first-team action under his belt before the end of the season but with just one substitute appearance in the Premier League that is unlikely to happen at City.
Despite his lack of football this season the club appear to be reluctant to let him leave, even if any deal was only on a temporary loan basis.
"Of course it is disappointing. But I can't say more," Schmeichel told Ekstra Bladet.
Schmeichel has been loaned out seven times during his stay at City, with the last move coming in March last year when he went to Coventry until the end of the season.