World leaders at the G20 meeting here on Thursday were closing in on a statement calling for new restraints on banker pay, but would not endorse specific monetary caps, a deal-breaker for the United States.

High levels of compensation, which in some cases resulted in top executives of money-losing financial companies reaping tens of millions of dollars in bonuses, have outraged political leaders and are a top target of regulatory reform efforts.

Officials were focused on finding ways to link a bank's bonus pool and executive compensation more closely to the health of its balance sheet and overall profitability.

Europeans are horrified by banks, some reliant on taxpayers' money, once again paying exorbitant bonuses, said European Commission President Jose Manuel Durao Barroso in a statement preceding the official opening of the summit of the Group of 20 nations.

In Pittsburgh, the EU will call for coordinated action to stop this, building on measures already taken in Europe and elsewhere, he said.

Before the global financial crisis that began last year, and in some cases right through it, a glaring disconnect between pay and performance was on display at many banks, including some rescued by massive taxpayer bailouts.

In addition, critics say the crisis was exacerbated by pay structures that rewarded short-term performance, which encouraged excessive risk-taking.

Key to the formulation of the G20 statement will be input from the Financial Stability Board, a policy coordinating arm of the G20 nations with the world's largest economies.

The FSB was expected to publish guidelines on pay on Thursday or Friday. FSB Chairman Mario Draghi had scheduled a news conference for later on Thursday.

The FSB said earlier this month that it would advise G20 nations to prevent banks with low levels of capital from offering large bonuses under guidelines to be discussed by the G20.

We will have a link between total bonus pool and the firm's overall performance, Draghi said on September 15.

An FSB official said the board would issue guidelines at the summit on how firms should structure pay packets.

The guidelines were also expected to cover disclosure of pay levels, deferral and vesting periods on share-related pay, independent oversight, and clawing back unfairly earned pay.

Japan wants to play a part in formulating global rules to rein in excessive money-making games, Prime Minister Yukio Hatoyama said in a speech on Thursday ahead of the summit.

U.S. President Barack Obama on Wednesday said financial regulation needed strengthening to put an end to the greed, excess and abuse that caused the financial crisis.

Earlier calls from some EU leaders, particularly French President Nicolas Sarkozy, for quantitative caps on pay were toned down after U.S. officials made clear that such an approach was not politically feasible.

The G20 adopted high-level principles in April to stop remuneration packages from encouraging traders and bankers to take excessive short-term risks that could destabilize a firm.

(Additional reporting by Sumeet Desai and Huw Jones; Editing by Leslie Adler)