HSBC Holdings is to issue shares to pay the cash element of bonuses for its UK bankers in response to regulatory pressure to preserve capital, a person familiar with the matter said on Tuesday.

HSBC's change to its structure means it will issue tens of millions of pounds of new shares to cover any non-deferred cash bonus of more than 50,000 pounds for UK-based staff, the person said.

Although the move means the bank will not erode capital by paying bonuses, the issuance of shares means it will be dilutive for other shareholders.

It follows pressure from Britain's Financial Services Authority for banks to reduce payouts to staff to preserve capital. The Association of British Insurers has also said banks should pay more to investors, rather than staff.

Barclays said this month it would cap the cash element of its bonuses to 65,000 pounds. Part-nationalised Royal Bank of Scotland and Lloyds Banking Group restrict their cash payouts.

HSBC will defer some of its bonuses and pay some in shares as normal. The new structure only applies to non-deferred cash payments. Awards of less than 50,000 pounds will also be paid in cash as normal.

It was not clear how many shares will be issued to cover the cash awards. HSBC directors and senior executives typically received about 20 percent of their bonuses in upfront cash last year.

The bank is due to report its 2011 results and release pay details in its annual report on Monday.

HSBC declined to comment.

(Reporting by Steve Slater; Editing by Greg Mahlich)