Liverpool target Renato Sanches is free to leave, says Bayern boss
The Portugal international has only been with the Bundesliga giants for a year but has fallen out of favour with three-time Champions League winning manager, following a series of under-par performances.
Ancelotti has now said that he would not prevent the 20-year-old from leaving.
"He knows his position in the team. He knows there is much competition," explained Ancelotti.
"If he stays I am satisfied. If he wants to leave it's okay as well. No problem."
Sanches was an unused substitute as Bayern kicked off their Bundesliga title defence with a 3-1 win over Bayer Leverkusen last Friday.
Ancelotti's side travel to Werder Bremen on Saturday and the Italian expects a difficult encounter, having edged to a 2-1 win at the Weserstadion in January.
"Last season it was a very difficult game in Bremen," he said. "Our legs will be a lot fitter than they were against Leverkusen.
"My team this year is better than last year. If everyone is fit, we will be competitive."
By Jacque Talbot
Follow: @Jac_Talbot