The four-time world champion will leave Ferrari at the end of the 2020 season, bringing an end to his six-season stay at the Italian outfit.
Vettel has been linked with a move to Mercedes, who is yet to pin down its two drivers for next year. Mercedes team boss Toto Wolff recently spoke about the possibility of signing Vettel, declaring: “We owe it to a four-time world champion not to come out and say straight away 'No.' You need to think about it.”
When asked by Marca if Vettel would be a loss to F1 if he can't find a seat for 2021, Binotto said: “Yes, it would be a loss, because we love and appreciate him and it would be important for him to find a good seat next year.
“I hear rumours that Mercedes are interested and I would be very happy for him, I really would be.”
Binotto says that multiple factors contributed to Vettel's departure from the team: “Ferrari love Sebastian as a driver and as a person as he is part of our team and our project, so it is never an easy decision.
“He was our first option and then the coronavirus pandemic came, a situation that has changed many things, from the regulation to the budget cap.
“There are things that have changed the situation, with the new car postponed to 2022. We had to make internal reviews and that's what we did.”
In March, it was rumoured that Vettel had been offered a new contract with a big pay cut, which was a leading reason behind the split between Ferrari and the German.
However, Binotto denied the rumour: "No, that's not true. It is simply that things have changed and we are looking at a new cycle.
“It seems that this vision, in terms of timing, did not coincide with his vision. It was not because of the type of offer or its duration.”
Ferrari opted to replace Vettel with Carlos Sainz, who joins on a two-year contract alongside Charles Leclerc, who is heading into his second season with Ferrari in 2021.
Bahrain International Circuit - Winter testing