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.

The Spanish government said it would clear Banco Bilbao Vizcaya Argentaria’s hostile bid for smaller peer Banco de Sabadell on the condition that the banks don’t legally merge for up to five years.Spain’s Ministry of Economy,

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.