Spain's BBVA will not be allowed to integrate its operations with Sabadell for at least three years as one of the conditions imposed by the Spanish government on its hostile bid for its smaller rival in a potential blow to the suitor's expansion plans.

Spain’s government is set to impose additional conditions on BBVA SA’s planned takeover of Banco Sabadell SA, La Vanguardia reported, in a further setback for the €14 billion ($16 billion) deal more than a year after it was first proposed.

Spain's BBVA must wait three years to integrate with Sabadell as the government sets conditions on their merger. The move aims to protect jobs and financial stability. As shares fluctuate, analysts suggest BBVA consider alternative actions,