The 39-year-old has been linked with a move away from the Olympic Stadium outfit after he guided the club to the Bundesliga in his first season in charge in the German capital.
A report in Berliner Zeitung am Sonntag claimed that Babbel met with Schalke sporting director Horst Heldt at the Berlin Ritz Carlton hotel one day after his side's 2-1 league defeat at the hands of the Gelsenkirchen outfit.
Babbel confirmed that he did meet Heldt at the hotel, but stressed that his situation was not discussed.
"A celebration for the loss? Nonsense, I am not that dumb," Babbel is quoted by Bild as saying.
"The truth is that I had a drink with Horst in Munich on Saturday to celebrate his birthday.
"I never signed or promised to sign a contract."
Hertha are 11th in Bundesliga, while Schalke are third.
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