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.

BBVA SA decided to keep its takeover offer for Banco Sabadell SA alive even though the Spanish government’s decision to ban a merger for several years has cast doubt over how it will pan out.

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.