Derivatives and Hedging Activities (Tables)

12 Months Ended

Dec. 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:


	December 31, 2014								December 31, 2013
			Fair Value								Fair Value
in millions	Notional Amount		Derivative Assets			Derivative Liabilities			Notional Amount		Derivative Assets			Derivative Liabilities
Derivatives designated as hedging instruments:
Interest rate	$	15,095	$	272		$	26		$	14,487	$	306		$	37
Foreign exchange		371		8			—			190		4			1
Total		15,466		280			26			14,677		310			38
Derivatives not designated as hedging instruments:
Interest rate		43,771		665			618			46,173		733			702
Foreign exchange		4,024		85			81			4,701		59			56
Commodity		1,544		608			594			1,616		112			106
Credit		512		5			7			910		5			12
Total		49,851		1,363			1,300			53,400		909			876
Netting adjustments ^(a)		—		(1,034	)		(542	)		—		(812	)		(500	)
Net derivatives in the balance sheet		65,317		609			784			68,077		407			414
Other collateral^(b)		—		(155	)		(241	)		—		(72	)		(287	)
Net derivative amounts	$	65,317	$	454		$	543		$	68,077	$	335		$	127

(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 years ended December 31, 2014, and December 31, 2013, and where they are recorded on the income statement.

Year ended December 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

(5)

^(a

⁾

Interest rate

Interest expense – Long-term debt

117

Total

124

(5)

Year ended December 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

(222)

Long-term debt

Other income

222

^(a

⁾

Interest rate

Interest expense – Long-term debt

129

Total

(93)

222

(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 years ended December 31, 2014, and December 31, 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.

Year ended December 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

Interest income – Loans

Other income

—

Interest rate

(8)

Interest expense – Long-term debt

(4)

Other income

—

Interest rate

(1)

Investment banking and debt placement fees

—

Other income

—

Net Investment Hedges

Foreign exchange contracts

Other Income

—

Other income

—

Total

—


	Year ended December 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	$	(19)		Interest income – Loans	$	67		Other income		—
Interest rate		20		Interest expense – Long-term debt		(8)		Other income		—
Interest rate		—		Investment banking and debt placement fees		—		Other income		—
Net Investment Hedges
Foreign exchange contracts		9		Other Income		(3)		Other income		—
Total	$	10			$	56				—

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:


in millions	December 31, 2013		2014 Hedging Activity		Reclassification of Gains to Net Income		December 31, 2014
AOCI resulting from cash flow and net investment hedges	$	(11)	$	43	$	(40)	$	(8)

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 years ended December 31, 2014, 2013, and 2012, and where they are recorded on the income statement.


	2014								2013								2012
December 31, in millions	Corporate Services Income		Other Income			Total			Corporate Services Income		Other Income			Total			Corporate Services Income		Other Income			Total
NET GAINS (LOSSES)
Interest rate	$	16		—		$	16		$	17		—		$	17		$	24	$	(2	)	$	22
Foreign exchange		34		—			34			38		—			38			36		—			36
Commodity		6		—			6			5		—			5			9		—			9
Credit		—	$	(21	)		(21	)		1	$	(15	)		(14	)		—		(20	)		(20	)
Total net gains (losses)	$	56	$	(21	)	$	35		$	61	$	(15	)	$	46		$	69	$	(22	)	$	47

Largest Exposure to Individual Counterparty

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


December 31, in millions	2014		2013
Largest gross exposure (derivative asset) to an individual counterparty	$	133	$	121
Collateral posted by this counterparty		100		42
Derivative liability with this counterparty		31		106
Collateral pledged to this counterparty		—		33
Net exposure after netting adjustments and collateral		2		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.


December 31, in millions	2014		2013
Interest rate	$	607	$	633
Foreign exchange		41		23
Commodity		478		58
Credit		1		1
Derivative assets before collateral		1,127		715
Less: Related collateral		518		308
Total derivative assets	$	609	$	407

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 December 31, 2014, and December 31, 2013. The fair value of credit derivatives presented below does not take into account the effects of bilateral collateral or master netting agreements.


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

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 December 31, 2014, and December 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.


	2014							2013
December 31, dollars in millions	Notional Amount		Average Term (Years)		Payment / Performance Risk			Notional Amount		Average Term (Years)		Payment / Performance Risk
Single-name credit default swaps	$	5		.72		.87	%	$	55		.77		22.28	%
Other		6		2.89		9.58			13		5.03		8.82
Total credit derivatives sold	$	11		—		—		$	68		—		—

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 December 31, 2014, and December 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 December 31, 2014, and take into account all collateral already posted. A similar calculation was performed for KeyCorp, and additional collateral of less than $1 million would have been required as of December 31, 2014, and 2013.


December 31, in millions	2014				2013
December 31, in millions	Moody’s		S&P		Moody’s		S&P
KeyBank’s long-term senior unsecured credit ratings		A3		A-		A3		A-
One rating downgrade	$	1	$	1	$	6	$	6
Two rating downgrades		1		1		11		11
Three rating downgrades		3		3		11		11