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Restrictions on Cash, Dividends and Lending Activities
12 Months Ended
Dec. 31, 2011
Restrictions on Cash, Dividends and Lending Activities [Abstract]  
Restrictions on Cash, Dividends and Lending Activities

3. Restrictions on Cash, Dividends and Lending Activities

Federal law requires a depository institution to maintain a prescribed amount of cash or deposit reserve balances with its Federal Reserve Bank. KeyBank maintained average reserve balances aggregating $240 million in 2011 to fulfill these requirements.

Capital distributions from KeyBank and other subsidiaries are our principal source of cash flows for paying dividends on our common and preferred shares, servicing our debt and financing corporate operations. Federal banking law limits the amount of capital distributions that a bank can make to its holding company without prior regulatory approval. A national bank’s dividend-paying capacity is affected by several factors, including net profits (as defined by statute) for the two previous calendar years and for the current year, up to the date of dividend declaration.

During 2011, KeyBank paid KeyCorp a total of $300 million in dividends; nonbank subsidiaries paid KeyCorp a total of $33 million in cash dividends and noncash dividends of $12 million. Based upon existing regulatory guidance, KeyBank has capacity to pay $1.3 billion in dividends to KeyCorp at January 1, 2012. During 2011, KeyCorp did not make capital infusions to KeyBank. At December 31, 2011, KeyCorp held $2.1 billion in short-term investments, which can be used to pay dividends, service debt and finance corporate operations.

Federal law also restricts loans and advances from bank subsidiaries to their parent companies (and to nonbank subsidiaries of their parent companies), and requires those transactions to be secured.