The 21-year-old defender has been frozen out of the first team this season but an agreement to take him to Gelsenkirchen could hinge on a compromise over the structure of the deal

By Paul Clennam and Hassan Talib Schalke are to hold further talks with Manchester City on Monday with regards to a move for defender Matija Nastasic understands.The Serbian centre-back has fallen out of favour at the Etihad Stadium and City are keen to free up funds by moving him on.Nastasic is excited about a switch to the Bundesliga and Schalke fit the bill but the two clubs must compromise on the structure of the deal.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 €16.5m (£13m) and they know that they need to sell in order to buy in January.It leaves Manuel Pellegrini’s side keen to secure a permanent move away for Nastasic but it is thought Schalke cannot afford to pay the fee that would be expected for such a deal. If the centre-back is to head to Gelsenkirchen, it could be more likely to settle on a loan-to-buy deal in which the German team would be obliged to buy him in the summer if he plays a minimum number of matches while on loan.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."If the two teams cannot find an agreement then AC Milan have also registered interest in Nastasic but the 21-year-old is not currently interested in a return to Serie A with the Rossoneri. //