Derivatives and Hedging Activities (Tables)

3 Months Ended

Mar. 31, 2014

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Fair Values, Volume of Activity and Gain (Loss) Information Related to Derivative Instruments

Our derivative instruments are included in “derivative assets” or “derivative liabilities” on the balance sheet, as indicated in the following table:


	March 31, 2014								December 31, 2013								March 31, 2013
			Fair Value								Fair Value								Fair Value
in millions	Notional Amount		Derivative Assets			Derivative Liabilities			Notional Amount		Derivative Assets			Derivative Liabilities			Notional Amount		Derivative Assets			Derivative Liabilities
Derivatives designated as hedging instruments:
Interest rate	$	14,479	$	277		$	40		$	14,487	$	306		$	37		$	20,067	$	499		$	27
Foreign exchange		312		5			1			190		4			1			202		1			3

Total		14,791		282			41			14,677		310			38			20,269		500			30
Derivatives not designated as hedging instruments:
Interest rate		44,156		688			647			46,173		733			702			47,334		1,027			1,000
Foreign exchange		4,653		55			51			4,701		59			56			4,925		70			65
Commodity		1,597		110			105			1,616		112			106			1,801		120			114
Credit		905		5			12			910		5			12			1,056		7			11

Total		51,311		858			815			53,400		909			876			55,116		1,224			1,190
Netting adjustments ^(a)		—		(713	)		(448	)		—		(812	)		(500	)		—		(1,115	)		(696	)

Net derivatives in the balance sheet		66,102		427			408			68,077		407			414			75,385		609			524
Other collateral ^(b)		—		(61	)		(325	)		—		(72	)		(287	)		—		(123	)		(436	)

Net derivative amounts	$	66,102	$	366		$	83		$	68,077	$	335		$	127		$	75,385	$	486		$	88

(a)	Netting adjustments represent the amounts recorded to convert our derivative assets and liabilities from a gross basis to a net basis in accordance with the applicable accounting guidance.

(b)

Other collateral represents the amount that cannot be used to offset our derivative assets and liabilities from a gross basis to a net basis in accordance with the applicable accounting guidance. The other collateral consists of securities and is exchanged under bilateral collateral and master netting agreements that allow us to offset the net derivative position with the related collateral. The application of the other collateral cannot reduce the net derivative position below zero. Therefore, excess other collateral, if any, is not reflected above.

Pre-Tax Net Gains (Losses) on Fair Value Hedges

The following table summarizes the pre-tax net gains (losses) on our fair value hedges for the three-month periods ended March 31, 2014, and 2013, and where they are recorded on the income statement.

Three months ended March 31, 2014

in millions

Income Statement Location of
Net Gains (Losses) on Derivative

Net Gains
(Losses) on
Derivative

Hedged Item

Income Statement Location of
Net Gains (Losses) on Hedged Item

Net Gains
(Losses) on
Hedged Item

Interest rate

Other income

—

Long-term debt

Other income

—

^(a)

Interest rate

Interest expense — Long-term debt

Total

—


	Three months ended March 31, 2013
in millions	Income Statement Location of Net Gains (Losses) on Derivative	Net Gains (Losses) on Derivative			Hedged Item	Income Statement Location of Net Gains (Losses) on Hedged Item	Net Gains (Losses) on Hedged Item
Interest rate	Other income	$	(38	)	Long-term debt	Other income	$	38	^(a)
Interest rate	Interest expense — Long-term debt		33

Total		$	(5	)			$	38

(a)	Net gains (losses) on hedged items represent the change in fair value caused by fluctuations in interest rates.

Derivative Instrument Cash Flow Hedge Earning Recognized by Income Statement Location

The following table summarizes the pre-tax net gains (losses) on our cash flow and net investment hedges for the three-month periods ended March 31, 2014, and 2013, and where they are recorded on the income statement. The table includes the effective portion of net gains (losses) recognized in OCI during the period, the effective portion of net gains (losses) reclassified from OCI into income during the current period, and the portion of net gains (losses) recognized directly in income, representing the amount of hedge ineffectiveness.


	Three months ended March 31, 2014
in millions	Net Gains (Losses) Recognized in OCI (Effective Portion)			Income Statement Location of Net Gains (Losses) Reclassified From OCI Into Income (Effective Portion)		Net Gains (Losses) Reclassified From OCI Into Income (Effective Portion)			Income Statement Location of Net Gains (Losses) Recognized in Income (Ineffective Portion)		Net Gains (Losses) Recognized in Income (Ineffective Portion)
Cash Flow Hedges
Interest rate	$	9			Interest income — Loans	$	15			Other income		—
Interest rate		(2	)		Interest expense — Long-term debt		(1	)		Other income		—
Interest rate		—			Investment banking and debt placement fees		—			Other income		—

Net Investment Hedges
Foreign exchange contracts		5			Other Income		—			Other income		—

Total	$	12				$	14					—


	Three months ended March 31, 2013
in millions	Net Gains (Losses) Recognized in OCI (Effective Portion)			Income Statement Location of Net Gains (Losses) Reclassified From OCI Into Income (Effective Portion)		Net Gains (Losses) Reclassified From OCI Into Income (Effective Portion)			Income Statement Location of Net Gains (Losses) Recognized in Income (Ineffective Portion)		Net Gains (Losses) Recognized in Income (Ineffective Portion)
Cash Flow Hedges
Interest rate	$	(4	)		Interest income — Loans	$	22			Other income		—
Interest rate		3			Interest expense — Long-term debt		(3	)		Other income		—
Interest rate		(1	)		Investment banking and debt placement fees		—			Other income		—

Net Investment Hedges
Foreign exchange contracts		5			Other Income		(3	)		Other income		—

Total	$	3				$	16					—

After-Tax Change in AOCI Resulting from Cash Flow Hedges

The after-tax change in AOCI resulting from cash flow and net investment hedges is as follows:


						Reclassification
in millions	December 31, 2013			2014 Hedging Activity		of Gains to Net Income			March 31, 2014
AOCI resulting from cash flow and net investment hedges	$	(11	)	$	7	$	(8	)	$	(12	)

Pre-Tax Net Gains (Losses) on Derivatives Not Designated as Hedging Instruments

The following table summarizes the pre-tax net gains (losses) on our derivatives that are not designated as hedging instruments for the three-month periods ended March 31, 2014, and 2013, and where they are recorded on the income statement.


	Three months ended March 31, 2014								Three months ended March 31, 2013
in millions	Corporate Services Income		Other Income			Total			Corporate Services Income		Other Income			Total
NET GAINS (LOSSES)
Interest rate	$	4		—		$	4		$	4		—		$	4
Foreign exchange		9		—			9			12		—			12
Commodity		1		—			1			1		—			1
Credit		—	$	(3	)		(3	)		—	$	(3	)		(3	)

Total net gains (losses)	$	14	$	(3	)	$	11		$	17	$	(3	)	$	14

Largest Exposure to Individual Counterparty

The following table summarizes our largest exposure to an individual counterparty at the dates indicated.


in millions	March 31, 2014		December 31, 2013		March 31, 2013
Largest gross exposure (derivative asset) to an individual counterparty	$	118	$	121	$	166
Collateral posted by this counterparty		43		42		58
Derivative liability with this counterparty		108		106		169
Collateral pledged to this counterparty		40		33		67
Net exposure after netting adjustments and collateral		7		6		6

Fair Value of Derivative Assets by Type

The following table summarizes the fair value of our derivative assets by type at the dates indicated. These assets represent our gross exposure to potential loss after taking into account the effects of bilateral collateral and master netting agreements and other means used to mitigate risk.


in millions	March 31, 2014			December 31, 2013		March 31, 2013
Interest rate	$	606		$	633	$	984
Foreign exchange		20			23		18
Commodity		72			58		45
Credit		(1	)		1		2

Derivative assets before collateral		697			715		1,049
Less: Related collateral		270			308		440

Total derivative assets	$	427		$	407	$	609

Fair Value of Credit Derivatives Purchased and Sold

The following table summarizes the fair value of our credit derivatives purchased and sold by type as of March 31, 2014, December 31, 2013, and March 31, 2013. The fair value of credit derivatives presented below does not take into account the effects of bilateral collateral or master netting agreements.


	March 31, 2014								December 31, 2013									March 31, 2013
in millions	Purchased			Sold		Net			Purchased			Sold			Net			Purchased			Sold			Net
Single-name credit default swaps	$	(6	)		—	$	(6	)	$	(7	)	$	1		$	(6	)	$	(3	)	$	1		$	(2	)
Traded credit default swap indices		(2	)		—		(2	)		—			—			—			(1	)		—			(1	)
Other		—			—		—			—			(1	)		(1	)		—			(1	)		(1	)

Total credit derivatives	$	(8	)		—	$	(8	)	$	(7	)		—		$	(7	)	$	(4	)		—		$	(4	)

Credit Derivatives Sold and Held

The following table provides information on the types of credit derivatives sold by us and held on the balance sheet at March 31, 2014, December 31, 2013, and March 31, 2013. The notional amount represents the maximum amount that the seller could be required to pay. The payment/performance risk assessment is based on the default probabilities for the underlying reference entities’ debt obligations using a Moody’s credit ratings matrix known as Moody’s “Idealized” Cumulative Default Rates. The payment/performance risk shown in the table represents a weighted-average of the default probabilities for all reference entities in the respective portfolios. These default probabilities are directly correlated to the probability that we will have to make a payment under the credit derivative contracts.


	March 31, 2014							December 31, 2013							March 31, 2013
dollars in millions	Notional Amount		Average Term (Years)		Payment / Performance Risk			Notional Amount		Average Term (Years)		Payment / Performance Risk			Notional Amount		Average Term (Years)		Payment / Performance Risk

Single-name credit default swaps	$	55		.52		22.28	%	$	55		.77		22.28	%	$	82		1.23		7.89	%
Other		13		4.80		8.23			13		5.03		8.82			19		5.38		10.09

Total credit derivatives sold	$	68		—		—		$	68		—		—		$	101		—		—

Credit Risk Contingent Feature

The following table summarizes the additional cash and securities collateral that KeyBank would have been required to deliver under the ISDA Master Agreements had the credit risk contingent features been triggered for the derivative contracts in a net liability position as of March 31, 2014, December 31, 2013, and March 31, 2013. The additional collateral amounts were calculated based on scenarios under which KeyBank’s ratings are downgraded one, two, or three ratings as of March 31, 2014, and take into account all collateral already posted. A similar calculation was performed for KeyCorp, and additional collateral of $2 million would have been required as of March 31, 2014, less than $1 million as of December 31, 2013, and $3 million as of March 31, 2013.


	March 31, 2014				December 31, 2013				March 31, 2013
in millions	Moody’s		S&P		Moody’s		S&P		Moody’s		S&P
KeyBank’s long-term senior unsecured credit ratings		A3		A-		A3		A-		A3		A-
One rating downgrade	$	6	$	6	$	6	$	6	$	6	$	6
Two rating downgrades		11		11		11		11		11		11
Three rating downgrades		11		11		11		11		11		11