Co-op Bank investors want say on board seats Holders of the bank's junior debt will see the value of their holdings haircut by £500m as part of the fundraising with the Co-op set to provide the remaining £1bn to fill a capital shortfall in the business. In return for accepting new bonds with a lower face value than their existing holdings, the Co-op will offer debt investors at least a 25pc stake in its banking arm. Richard Pym, chairman of the Co-op Bank, is leading the search for new directors. Along with Mr Pym, the lender's board consists of chief executive Niall Booker, Rod Bulmer, its deputy chief executive, Euan Sunderland, chief executive of the Co-op Group, Ben Reid, a director of the Co-op Group, and four independent directors, Richard Coates, Anne Gunther, Graeme Hardie and Merlyn Lowther. Any new appointments are not expected until after the publication of the capital raising plans. Representatives of the bondholders, led by US investment bank Moelis & Co, have held talks with Co-op Bank over alternatives to its current plans. Last month, Moelis set out a proposal for bondholders to exchange all of their debt for ownership of the bank. The plan would see the Co-op Group lose control of the bank. Since then the Co-op Bank has set up a subcommittee of its board to meet Moelis and any other bondholders wishing to discuss ways the bank could fill its capital shortfall. The hole has largely been blamed on the Co-op's merger of its banking arm with Britannia Building Society. Neville Richardson, the former chief executive of Britannia, has dismissed these claims and said much of the losses resulted from the subsequent poor management of the building society's loan portfolio. The Bank of England's Andrew Bailey, chief executive of the Prudential Regulation Authority, has disputed his claims. The Treasury select committee is investigating the problems at the Co-op Bank. The Co-op and Moelis & Co declined to comment.