Banco Santander, Spain's largest bank, is considering a multibillion-euro capital increase, people with knowledge of the matter said.

The lender may raise about 7 billion euros ($8.2 billion), said one of the people, who asked not to be named because the information is not public. Final details are still being discussed and plans may change, the people said.
Shares were earlier suspended in Madrid by the Spanish market regulator.

Chairman Ana Botin is looking to strengthen the bank's balance sheet as investors have expressed concerns that capital at the lender is weaker than some competitors. Santander is one of the few European banks that isn't regularly publishing its capital ratio according to the full application of Basel III rules. As of September, the bank had a core equity Tier 1 ratio of 11.44%.

Banco Santander is entering a new period after Botin took over from her father Emilio in September. She ousted the chief executive officer in November to promote Chief Financial Officer Jose Antonio Alvarez to CEO. The lender faces a growing challenge from tougher competition and stricter regulation, Botin has signaled.

Santander's U.S. unit, the $77 billion-asset Santander Bank based in Boston, had a rough 2014. It failed its federal stress test and faced charges of redlining; the lending policies of its affiliated subprime automobile lender came under scrutiny from both the Justice Department and New York banking regulators; and its holding company got into hot water with the Federal Reserve Board for paying a dividend to shareholders without first receiving the Fed's approval.

It faces challenges to its market share in key Northeastern markets such as Providence, New York, Philadelphia and Reading, Pa.

Yet Santander is an active commercial real estate lender and has a growing presence in credit cards. Those markets could continue to be sources of growth, and despite the heightened scrutiny of subprime auto lenders, some observers believe Santander is well-positioned to gain share in the auto-financing market.

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