Tigers boss Steve Bruce is closing in on a deal for Besiktas goalkeeper Allan McGregor, but he will provide cover for Schmeichel next season if Bruce can finally agree a fee with the Foxes.
Hull's last offer of £2million plus Jack Hobbs was rejected as the Foxes hold out for £4million and Bruce will now try and reach a compromise with the Championship side.
Schmeichel has just over a year remaining on his current contract and Bruce is unwilling to go too high as he will be available on a free this time next year, while Leicester do not want to lose him for nothing, so there is a good chance a deal will be struck.
Meanwhile, Bruce is expected to wrap up the permanent signing of Ahmed Elmohamady in the coming days, and could also make a move for Burnley striker Charlie Austin.
Hull last week