Palermo's owner Fabrizio Miccoli claims the player is set to snub Birmingham to remain with the Serie A club.
Earlier, Palermo announced Miccoli would appear at a press conference on Thursday to reveal his future plans, but Maurizio Zamparini has not waited to claim Miccoli is staying.
"Fabrizio will remain with us," he said on reterete24.it, adding that Thursday's press conference will "erase any doubt over the permanence of our captain".
He continued: "I met Miccoli, and I reiterated the esteem and confidence the club holds him in. He was a bit worried after he suffered a knee injury. But I told him to stay because we consider him a key part of the project."
Palermo sporting director Walter Sabatini admitting Birmingham had made enquiries about the 30-year-old.
Sabatini had told TGS: "Is Miccoli considering Birmingham's offer? It is normal that a player has some doubts when an offer is received.
"Palermo do not want to sell the player. We will evaluate everything soon.
"Miccoli is essential for us, and it is important that we do not lose him.
"But it is equally important that everyone is happy."