Plasmonic metamaterials and metasurfaces are important for many linear and nonlinear photonic applications. Here, the possibility to control a nanostructured layer spontaneously formed near an interface of a thin silver film is shown, where the interplay between a grain boundary structure and surface segregation of germanium atoms leads to encapsulation of the grains and, as the result, formation of a composite metamaterial near the film surface. This Ag/Ge composite exhibits strong localized surface plasmon resonances at Ge-encapsulated silver grains, leading to extraordinary second harmonic generation for both transverse magnetic and transverse electric polarized fundamental light with up to two orders of magnitude enhancement compared to thin Ag films without Ge atoms. Segregation phenomena open the possibility for fabrication of a new class of composite materials and gives additional degree of freedom in designing optical properties of nanostructured metamaterials.