BBVA SA is leaning toward proceeding with its takeover offer for Banco Sabadell SA and is sounding out investors to see if they still back the deal, after Spain said the lenders wouldn’t be allowed to fully merge for several years.

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.

BBVA's acquisition of Sabadell faces a significant delay, as the Spanish government has mandated atleast three-year wait period before the two entities can integrate their operations. This condition is part of the government's approval of BBVA's hostile bid for the smaller rival,