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