Company: KEY-PI
Filing Date: 2025-05-06
Form Type: 10-Q
Source: 0000091576-25-000058
Chunk: 236

Company: KEYCORP /NEW/
Filing Date: 2025-05-06
Form: 10-Q
Item: Item 8
Chunk 236
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31, 2024Interest rate$75 $58 Foreign exchange57 81 Commodity314 170 Credit— — Other12 15 Derivative assets before collateral458 324 Plus(Less): Related collateral(38)(75)Total derivative assets$420 $249 We enter into derivative transactions with two primary groups: broker-dealers and banks, and clients. Given that these groups have different economic characteristics, we have different methods for managing counterparty credit exposure and credit risk.

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We enter into transactions with broker-dealers and banks for various risk management purposes. These types oftransactions are primarily high dollar volume. We enter into bilateral collateral and master netting agreements withthese counterparties. We clear certain types of derivative transactions with these counterparties, whereby centralclearing organizations become the counterparties to our derivative contracts. In addition, we enter into derivativecontracts through swap execution facilities. Swap clearing and swap execution facilities reduce our exposure tocounterparty credit risk. At March 31, 2025, we had gross exposure of $103 million to broker-dealers and banks and a net exposure of $23 million after the application of master netting agreements and cash collateral, where such qualifying agreements exist. We had net exposure of $22 million after considering $1 million of additional collateral held in the form of securities. At December 31, 2024, we had gross exposure of $247 million to broker-dealers and banks, a net exposure of $42 million after the application of master netting agreements and cash collateral, where such qualifying agreements exist, and held no additional collateral in the form of securities against this net exposure. We enter into transactions using master netting agreements with clients to accommodate their business needs. Inmost cases, we mitigate our credit exposure by cross-collateralizing these transactions to the underlying loan collateral. For transactions that are not clearable, we mitigate our market risk by buying and selling U.S. Treasuries and SOFR futures or entering into offsetting positions. Due to the cross-collateralization to the underlying loan, we typically do not exchange cash or marketable securities collateral in connection with these transactions. To address the risk of default associated with these contracts, we have established a CVA reserve (included in “accrued income and other assets”). At March 31, 2025, and December 31, 2024, our CVA reserve was $6 million and $4 million, respectively