The lender plans to largely base the managers' pay rises on performance standards but about 80 percent of staff will not be able to meet those standards, the source said, so it is effectively reinstating a pay freeze announced in January.
The latest change was first reported by the Financial Times on Wednesday.
Chief Executive Stuart Gulliver sent a memo to staff on Feb. 11, saying the bank had dropped the plans to freeze pay after receiving staff feedback on the plan and the way it was communicated.
Gulliver said at the time that Europe's biggest bank would find another way to achieve significant cost reduction targets for the end of 2017.
"HSBC makes pay awards around the world based on performance and merit, taking into account any local considerations," a bank spokesman said in an emailed statement on Wednesday.
Worries about global growth have heaped pressure on the banking sector in recent months, forcing many big lenders to make sweeping cost cuts.
Swiss bank UBS is imposing a pay freeze across its investment banking arm, two sources familiar with the matter told Reuters this month, while Deutsche Bank said in January it had scrapped board bonuses this year after posting a record loss for 2015.
(Reporting by Richa Naidu and Jane Merriman; Editing by Susan Fenton)