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

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.

The Spanish government said it would approve BBVA’s hostile takeover of Banco de Sabadell on condition that the banks temporarily be managed independently and kept legally separate.