Banco Sabadell SA’s sale of its UK unit will further complicate the unsolicited takeover approach by BBVA SA for its smaller Spanish rival, analysts said.

Spain's BBVA said on Monday it would move ahead with its hostile takeover bid for smaller rival Sabadell despite the government effectively blocking it from fully merging with its smaller rival for at least three years.

The Spanish government has mandated at least three-year wait period for BBVA and Sabadell as takeover condition.

Banco Sabadell’s board of directors has reached an agreement to sell TSB to Santander for around £2.9bn, expected to complete in 2026.

Santander agrees £2.65bn deal to acquire TSB from Spain’s Sabadell, beating Barclays in latest move amid accelerating UK banking consolidation.