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.