I don't see how this is a footballing move.
City are playing hardball, and I don't see what the end game is. Its illogical on all fronts. It is obvious that Yaya is not going to take paycut or miss out on his loyality bonus due at the end of the year. In this scenario city have two choices 1) Subsidize a move away from the club, and free up some of the wage bill 2) Utilize his talents at the club instead of paying him part wages to play for another team.
It appears City have chosen option 3 which is to be vindictive, keep Yaya around as a distraction without utilizing him as a footballer. This is horrible on financial level, football level, and does not help clubs reputation among players around the world.