Balaban has been frozen out of things at Villa Park as he is being forced to train on his own and denied even reserve team football.
The 25-year-old has warned that he is willing to sit tight and see out the remaining two-and-a-half-year contract if he was not given a satisfactory financial offer to cancel his contract.
O'Leary admitted that the club were now trying to thrash out a package with the Croatian international to allow him to leave.
"The lad has been here a few years. He is still here," said O'Leary.
"The club is trying to work something out with him but it is out of my hands."
Meanwhile Peter Crouch, looks set to return to Villa next month when his loan month with Norwich expires.
Norwich are keen to keep the giant striker at Carrow Road, but they have not made an offer to sign him permanently and he is poised to return to Villa Park.
"Peter has been out on loan but we haven't had an offer for him from anybody and I think he'll most probably be coming back here," said O'Leary.
"Norwich have to decide what they want to do with him but hopefully Peter's confidence has been built up a bit."