Birmingham are on the verge of completing a deal for Sporting Gijon midfielder Michel.
It is believed the two clubs are close to reaching agreement in terms of how the fee, of around £3m, will be paid by Blues.
Michel has been on City boss Alex McLeish's radar for several weeks as he looks to further strengthen his squad before the transfer window closes.
The 23-year-old played against Birmingham in a pre-season friendly at St Andrews 10 days ago, but has not featured in any of Sporting's subsequent warm-up games.
It remains to be seen whether the deal can be concluded for Michel to feature in the weekend home clash with Stoke, with tomorrow's game against visiting Portsmouth likely to be too soon.
McLeish has revamped his squad this summer but still wants to bring in another couple of players, including a defender - an area of the team currently decimated by injury.
McLeish has stressed the need to "manage expectation levels'' after rubbishing speculation he has spent £20m in the transfer market this summer.
But the former Scotland boss insisted City's spending power was still below most of the other Premier League clubs.
McLeish said: "It is premature to say we have done a deal for Michel. We have opened talks to see if we can do something.
"But the 'Is' are not dotted and the 'Ts' are not crossed.
"He is a good athlete, has terrific technique and touch which is what you would expect from a Spanish player. He would enhance the quality of the squad.
"But I can only do what I can spending-wise and once that becomes impossible I will respect that and get on with things.
"In terms of the budget, we have not spent £20m in transfer fees. That is ridiculous and rubbish.
"We paid money for Scott Dann, Roger Johnson and Barry Ferguson, a loan fee for Joe Hart and a loan fee for Christian Benitez with a view to paying big money eventually if he does the business.
"But people's expectations have to be managed. In terms of finance and comparing us with other clubs, we are still behind. But if we get the right result at the end of the season and stay up, then we can grow in strength.''