Derivatives and Hedging Activities (Tables)

3 Months Ended

Mar. 31, 2015

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, 2015								December 31, 2014								March 31, 2014
			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	$	16,802	$	315		$	14		$	15,095	$	272		$	26		$	14,479	$	277		$	40
Foreign exchange		339		20			—			371		8			—			312		5			1
Total		17,141		335			14			15,466		280			26			14,791		282			41
Derivatives not designated as hedging instruments:
Interest rate		41,913		728			678			43,771		665			618			44,156		688			647
Foreign exchange		5,544		152			147			4,024		85			81			4,653		55			51
Commodity		1,553		582			567			1,544		608			594			1,597		110			105
Credit		586		5			7			512		5			7			905		5			12
Total		49,596		1,467			1,399			49,851		1,363			1,300			51,311		858			815
Netting adjustments (a)		—		(1,071	)		(588	)		—		(1,034	)		(542	)		—		(713	)		(448	)
Net derivatives in the balance sheet		66,737		731			825			65,317		609			784			66,102		427			408
Other collateral (b)		—		(146	)		(244	)		—		(155	)		(241	)		—		(61	)		(325	)
Net derivative amounts	$	66,737	$	585		$	581		$	65,317	$	454		$	543		$	66,102	$	366		$	83

(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, 2015, and March 31, 2014, and where they are recorded on the income statement.

	Three months ended March 31, 2015
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	$	41		Long-term debt		Other income	$	(41	) (a)
Interest rate	Interest expense – Long-term debt		29
Total		$	70					$	(41	)
	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	$	33
Total		$	33						—

(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, 2015, and March 31, 2014, 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, 2015
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	$	54			Interest income – Loans	$	22			Other income		—
Interest rate		(2	)		Interest expense – Long-term debt		(1	)		Other income		—
Interest rate		(4	)		Investment banking and debt placement fees		—			Other income		—
Net Investment Hedges
Foreign exchange contracts		24			Other Income		—			Other income		—
Total	$	72				$	21					—
	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					—

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, 2014			2015 Hedging Activity		Reclassification of Gains to Net Income			March 31, 2015
AOCI resulting from cash flow and net investment hedges	$	(8	)	$	45	$	(13	)	$	24

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, 2015, and March 31, 2014, and where they are recorded on the income statement.

	Three months ended March 31, 2015								Three months ended March 31, 2014
	Corporate								Corporate
	Services		Other						Services		Other
in millions	Income		Income			Total			Income		Income			Total
NET GAINS (LOSSES)
Interest rate	$	4		—		$	4		$	4		—		$	4
Foreign exchange		8		—			8			9		—			9
Commodity		2		—			2			1		—			1
Credit		—	$	(4	)		(4	)		—	$	(3	)		(3	)
Total net gains (losses)	$	14	$	(4	)	$	10		$	14	$	(3	)	$	11

Largest Exposure to Individual Counterparty

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

	March 31,		December 31,		March 31,
in millions	2015		2014		2014
Largest gross exposure (derivative asset) to an individual counterparty	$	122	$	133	$	118
Collateral posted by this counterparty		91		100		43
Derivative liability with this counterparty		28		31		108
Collateral pledged to this counterparty		—		—		40
Net exposure after netting adjustments and collateral		3		2		7

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.

	March 31,		December 31,		March 31,
in millions	2015		2014		2014
Interest rate	$	755	$	607	$	606
Foreign exchange		58		41		20
Commodity		431		478		72
Credit		1		1		(1	)
Derivative assets before collateral		1,245		1,127		697
Less: Related collateral		514		518		270
Total derivative assets	$	731	$	609	$	427

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, 2015, December 31, 2014, and March 31, 2014. The fair value of credit derivatives presented below does not take into account the effects of bilateral collateral or master netting agreements.

	March 31, 2015									December 31, 2014								March 31, 2014
in millions	Purchased			Sold			Net			Purchased			Sold		Net			Purchased			Sold		Net
Single-name credit default swaps	$	(3	)		—		$	(3	)	$	(3	)		—	$	(3	)	$	(6	)		—	$	(6	)
Traded credit default swap indices		1			—			1			1			—		1			(2	)		—		(2	)
Other		1		$	(1	)		—			—			—		—			—			—		—
Total credit derivatives	$	(1	)	$	(1	)	$	(2	)	$	(2	)		—	$	(2	)	$	(8	)		—	$	(8	)

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, 2015, December 31, 2014, and March 31, 2014. 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, 2015							December 31, 2014							March 31, 2014
			Average		Payment /					Average		Payment /					Average		Payment /
	Notional		Term		Performance			Notional		Term		Performance			Notional		Term		Performance
dollars in millions	Amount		(Years)		Risk			Amount		(Years)		Risk			Amount		(Years)		Risk
Single-name credit default swaps	$	5		.47		.87	%	$	5		.72		.87	%	$	55		.52		22.28	%
Other		8		3.04		9.39			6		2.89		9.58			13		4.80		8.23
Total credit derivatives sold	$	13		—		—		$	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 March 31, 2015, December 31, 2014, and March 31, 2014. 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, 2015, December 31, 2014, and March 31, 2014, and take into account all collateral already posted. A similar calculation was performed for KeyCorp, and no additional collateral would have been required as of March 31, 2015, while additional collateral of less than $1 million and $2 million would have been required as of December 31, 2014, and March 31, 2014, respectively. For more information about the credit ratings for KeyBank and KeyCorp, see the discussion under the heading “Factors affecting liquidity” in the section entitled “Liquidity risk management” in Item 2 of this report.

	March 31, 2015				December 31, 2014				March 31, 2014
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	$	4	$	4	$	1	$	1	$	6	$	6
Two rating downgrades		4		4		1		1		11		11
Three rating downgrades		6		6		3		3		11		11