Shell Games at First Horizon, HBOS, Citigroup, Merrill

First Horizon is struggling to survive. It is also playing shell games that is going to cost it money. Stock dividends are tantamount to no dividends. The effect is the same as a stock split, and splits are clearly not dividends. It's even worse than meets the eyes.

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Citigroup is another bank playing expensive games to keep its dividend intact. It makes no economic sense to borrow money at 8.4% to pay a dividend yielding 5%. The aroma of that deal stinks as well.

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Things are so screwed up at Merrill Lynch, that it cannot even count as tier 1 capital the amount of money it is raising via hybrid preferreds because credit-rating companies typically don't allow more than 25 percent of a bank's capital base to be made up of preferred stock, and Merrill is well over that limit.

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HBOS, the U.K.'s biggest mortgage lender, may ask shareholders for as much as 4 billion pounds ($7.9 billion) at its annual meeting Tuesday to balance write-downs and strengthen its balance sheet as the economy slows, according to media reports.

If it goes ahead with the plans, HBOS would become the second major U.K. bank to require a so-called rights issue this month, on the heels of Royal Bank of Scotland (RBS) saying it would seek another 12 billion pounds last Tuesday.