G20 finance leaders on Saturday took aim at excessive bank pay and risk-taking at the root of the financial crisis and insisted trillions of dollars of emergency economic supports would be needed for some time.

Although the global economy looks brighter than when the Group of 20 finance ministers and central bankers met in April, their closing statement said they would not remove economic stimulus until the recovery was well entrenched.

While the timing of these eventual policy reversals may vary, the G20 said for the first time there should be some coordination to avoid adverse international fallout.

But as the focus shifted from crisis-fighting to establishing a safer financial system for the future, ministers searched for consensus on precise plans to rein in bankers' huge bonuses and use more of their profits to build buffers against any future crisis.

We cannot put the world in a position where things go back to where they were at the peak of the boom, U.S. Treasury Secretary Timothy Geithner said.

It cannot happen, will not happen and you can't expect the markets to solve that problem on their own because it's a huge collective action problem...so it has to come through things that countries legislate.

EXIT, BUT NOT NOW

On the public stage, the message was one of solidarity as policymakers agreed they must keep spending the $5 trillion already earmarked as economic stimulus and delay any unwinding of emergency fiscal and monetary measures until economies are sturdy enough to stand on their own.

The classic errors of economic policy during crises are that governments tend to act too late with insufficient force and then put the brakes on too early, Geithner said. We are not going to repeat those mistakes.

In a final statement, the G20 officials from rich and developing countries also said they would work with the International Monetary Fund and Financial Stability Board to develop cooperative and coordinated exit strategies.

Behind the scenes, some G20 sources expressed frustration that there was not more progress made in curbing excessive pay packages for bankers -- particularly those employed by firms that have received billions of dollars in government support.

There is broad agreement on what to do. The problem is we need to go beyond agreement. We need to have concrete measures, said International Monetary Fund chief Dominique Strauss-Kahn. I'm impressed by the level of consensus but I'm still waiting for strong measures to be decided and also to be implemented at the national level.

BANK PAY AND BUFFERS

Much of the public pressure before the meeting had centered on excessive bank remuneration, particularly for those who worked at banks receiving billions of dollars in public aid.

It is offensive to the public whose taxpayers' money in different ways has helped (keep) many banks from collapsing and is now underpinning their recovery, British Prime Minister Gordon Brown said at the start of Saturday's meetings.

On pay and bonuses in the financial sector, the statement fell short of calling for caps, saying that: We also ask the Financial Stability Board to explore possible approaches for limiting total variable remuneration in relation to risk and long-term performance.

That was seen as a compromise between France and Germany, which had pushed hard for pay limits, and Britain, the United States and Canada, which were opposed to caps. But it also effectively delayed a tricky political issue until the Pittsburgh summit later this month.

Finance leaders broadly agreed that banks ought to hold more capital as a cushion against the sort of catastrophic losses that led to bank failures and bailouts.

The final statement said that banks would be required to hold more and better quality capital once recovery is assured.

Geithner called for greater urgency on regulatory reform and cautioned that as the crisis recedes and the economy improves, the momentum for reform may wane.

He had surprised many of his colleagues by releasing an 8-point proposal on new capital rules just two days before the G20 meeting, with some ministers saying they did not have time to review it.

It is a delicate issue because tighter capital rules would likely hurt banks' profits and restrict their lending, both of which could be harmful to the economy.

CHANGING WORLD ORDER

The statement showed agreement that emerging nations like India and China should have a greater say in the running of the International Monetary Fund and World Bank but did not offer up any formula of how this should be achieved.

It said only that their voice in global economic policymaking would grow significantly and that it expected substantial progress to be made on the issue at a summit of world leaders in Pittsburgh later this month.

But the group said reforms need only be completed by the existing deadline of 2010 for the World Bank and 2011 for the IMF.

The BRIC group of leading emerging powers -- India, China, Russia and Brazil -- had laid out on Friday concrete targets for how much movement they wanted in IMF and World Bank quotas.

(Writing by Emily Kaiser; editing by Mike Dolan)

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