Santander bank asks shareholders for 7.5bn euros
New Banco Santander chairman Ana Botin has moved to strengthen the eurozone's largest bank with a huge fundraising.
The bank is asking shareholders for €7.5bn (£6bn), about 10% of its capital value.
Shares in the bank were temporarily suspended on the Madrid stock market pending the announcement.
Santander comfortably passed a recent bank stress test, but there was speculation about its capital strength and whether it might float its UK arm.
There was also speculation on Thursday that the cash-call might herald a big acquisition. Shares in Italy's Monte Paschi bank jumped 8% on the news.
Monte Paschi, the world's oldest bank with roots dating back to 1472, is looking for a buyer after a poor showing in the stress tests.
Mrs Botin, who took over from her father Emilio Botin in September following his death after nearly three decades at the helm, has said the bank faces tougher competition and stricter regulations.
Two months after taking the helm, Mrs Botin, former head of the UK division, replaced the chief executive Javier Marin with Jose Antonio Alvarez, the finance director.
She has also made other senior board changes in a bid to stamp her mark on the bank.
Santander also said on Thursday that it was cutting the dividend, another move that will strengthen the balance sheet.
Despite Spain's economic and property crash, Santander was one of the few major banks to keep its dividend unchanged with the financial crisis.
Although the cash-call was a surprise, analysts said strengthening the balance was the right thing to do given that the eurozone economy is under pressure.
But Yohan Salleron, an equity manager at France's Mandarine Gestion, told Reuters: "We met Santander one month ago and they didn't say they needed a capital increase. We need to understand why they need (it)."