Leverkusen have sought to open talks with City about a deal for the youngster.
Transfer expert Fabrizio Romano is reporting: "Bayer Leverkusen have approached Man City to sign James McAtee.
"Loan plus option offered to City; Xabi Alonso, huge fan as he's first choice to replace injured (Martin) Terrier.
"Man City and Pep Guardiola are reluctant to let him go as feel he can become a regular starter."
McAtee has scored five goals in 14 competitive matches this season, four of which have come from the start.