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 will decide shortly whether to move ahead with its hostile bid for Sabadell after reassessing cost savings in light of conditions imposed by the Spanish government, the bank's manager for Spain said on Wednesday.

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

Spain's Santander on Tuesday said it had reached an agreement to acquire smaller local rival Sabadell's British unit TSB for 2.65 billion pounds ($3.64 billion) in an all-cash deal, subject to approval by Sabadell shareholders.

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

The £2.65bn deal still has to be agreed by the current owner Sabadell's shareholders but if it does go ahead, Santander said it "intends to integrate TSB in the Santander UK group". The takeover would create Britain's third largest bank by share of personal current accounts.