Emilio Botin, one of Spain's most powerful men who transformed Santander from a small domestic lender into the euro zone's biggest bank, has died of a heart attack, aged 79.

The bank said on Wednesday it would hold a board meeting later in the day to nominate a successor as chairman. Analysts and investors have long expected this would be Botin's eldest daughter Ana Botin, who heads Santander's British business.

Such a move could spark controversy, however, with banking dynasties coming under scrutiny after a scandal at Portugal's Banco Espirito Santo, where the founding family's holdings are under scrutiny over financial irregularities.

"Succession shouldn't just be saying 'my daughter's going to take over'," said a corporate governance expert at a global asset manager which owns Santander shares, speaking on condition of anonymity.

At 0805 GMT, Santander stock was down 1.7 per cent at 7.62 euros.

Emilio Botin, "El Presidente" to his co-workers and the third generation of Botins to run Santander, used his keen eye for a deal to spread the bank's red-liveried brand with its stylised 'S' logo around the world, amassing 1.4 trillion euros ($1.8 trillion) of funds and nearly 200,000 employees.

"He was a man who has been able to make Banco Santander the most important bank of our country," Spanish Prime Minister Mariano Rajoy told journalists in Parliament.

"I had a meeting with him last week and he was well and in good form. It has been a surprise and a blow."

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Botin started out with a campaign to attract depositors in 1989, forcing rivals to compete on price, and bought troubled lender Banesto in 1994, making Santander Spain's biggest bank.

He then took advantage of cultural and language ties by expanding rapidly into Latin America and in 2004 scored his biggest coup with the purchase of British lender Abbey National for more than 9 billion pounds ($14.5 billion).

The expansion helped to shield Santander from the euro zone debt crisis and Spain's long-running recession, with the bank now making only about 14 per cent of its profit at home.

But it has not been unscathed. Santander has trailed the total returns to shareholders delivered in the past 10 years by rivals JPMorgan and HSBC - two firms Botin liked to measures himself against, according to colleagues.

Few doubt Ana Botin, 53, has a strong claim to succeed her father. After an eight-year early stint at JPMorgan's investment bank, she has spent most of the last 25 years at Santander.

But her high profile in the bank has already caused controversy. Earlier this year two shareholder advisory firms, ISS and Glass Lewis & Co, recommended shareholders vote against her re-election as a director - one because it thought Botins were over-represented on the board, the other because they considered there were not enough independent members.

In the event, she got the backing of 81.3 per cent of the votes, almost unchanged from three years earlier.

"Botin was the unofficial king of Spain. His death creates uncertainty and a power vacuum at the top," said a London-based hedge fund manager, who declined to be named.

"The obvious successor is his daughter Ana, which was always the plan, but he hasn't had a proper chance to groom her and install her as chairwoman before he died so there could be some infighting." - Reuters