Japan's Olympus Corp is expected to unveil a new board of directors as early as Monday, part of efforts to recover from a $1.7 billion accounting fraud, but the new line-up is likely to disappoint the firm's major overseas investors.

The existing, disgraced Olympus board meets on Monday and is set to consider an outside panel's recommendations for a new slate of candidates to replace it, with local media tipping a company veteran to become its next president and an ex-banker from its main lender to become chairman.

This would fall short of foreign shareholders' demands for fresh, outside talent in these key positions and could also stoke fears among some investors that Olympus' creditors will use the chairman's role to call the shots in the boardroom.

U.S.-based Indus Capital has said creditors such as Sumitomo Mitsui Banking Corp, Olympus's main lender and a unit of Sumitomo Mitsui Financial Group Inc (SMFG), could push Olympus into a big, dilutive sale of new equity.

Olympus's balance sheet has been weakened by the fraud, used to hide investment losses from its investors for 13 years before it was uncovered in October. But Indus and a few others believe it can recover without a big new share issue.

Domestic media have reported that Olympus will promote executive officer Hiroyuki Sasa to president and sources have told Reuters that Yasuyuki Kimoto will be nominated as chairman -- the two most important positions in a new board line-up which would go before shareholders at a meeting set for April 20.

Kimoto is a former executive of Sumitomo Mitsui Banking and is president of Japan Research Institute, an SMFG think-tank.

Sasa had worked as head of development as well as marketing at Olympus Medical Systems Corp, the group's medical equipment business which accounts for most of its profits. Olympus dominates the global market for diagnostic endoscopes.

The new team's views on equity tie-ups will be in focus. Olympus has been considering alliance offers to shore up its finances, with the likes of Japanese electronics firms Sony and Fujifilm believed to be among suitors.

But current President Shuichi Takayama reiterated this month that any tie-up decisions must wait until after the April shareholder meeting. He has also suggested that going it alone without seeking outside capital was an option.

Shares of Olympus, which have lost nearly half their value since former chief executive Michael Woodford blew the whistle on the scandal, last traded down 1.4 percent at 1,400 yen.

(Reporting by Chris Gallagher; Editing by Mark Bendeich)