Regions Bank 2011 Annual Report Download - page 137

Regions’ Bank Note program allows Regions Bank to issue up to $20 billion aggregate principal amount of
bank notes outstanding at any one time. No issuances have been made under this program as of December 31,
2011. Notes issued under the program may be senior notes with maturities from 30 days to 15 years and
subordinated notes with maturities from 5 years to 30 years. These notes are not deposits and they are not insured
or guaranteed by the FDIC.
Regions may, from time to time, consider opportunistically retiring outstanding issued securities, including
subordinated debt, trust preferred securities and preferred shares in privately negotiated or open market
transactions for cash or common shares. Regulatory approval would be required for retirement of some
instruments.
Morgan Keegan maintains certain lines of credit with unaffiliated banks to manage liquidity in the ordinary
course of business. See the “Short-Term Borrowings” section for further detail.
See the “Stockholders’ Equity” section for discussion of the Federal Reserve’s Comprehensive Capital
Analysis and Review.
COUNTERPARTY RISK
Regions manages and monitors its exposure to other financial institutions, also known as counterparty
exposure, on an ongoing basis. The objective is to ensure that Regions appropriately identifies and reacts to risks
associated with counterparties in a timely manner. This exposure may be direct or indirect exposure that could
create legal, reputational or financial risk to the Company.
Counterparty exposure may result from a variety of transaction types and may include exposure to
commercial banks, savings and loans, insurance companies, broker/dealers, institutions that provide credit
enhancements, and corporate debt issuers. Because transactions with a counterparty may be generated in one or
more departments, credit limits are established for use by various areas of the Company including treasury,
capital markets, finance, the mortgage division and lines of business.
To manage counterparty risk, Regions has a centralized approach to approval, management and monitoring
of exposure. To that end, Regions has a dedicated counterparty credit group and credit officer, as well as a
documented counterparty credit policy. Exposures to counterparties are regularly aggregated across departments
and reported to senior management.
Regions has various counterparties that are regularly relied upon for market making capabilities, primarily
broker-dealers. With these counterparties, Regions typically has in place margin agreements that are monitored
daily, with margin posted to collateralize exposure as appropriate. Interaction with these counterparties is part of
the risk management and monitoring process outlined above.
INTERNATIONAL RISK
Regions has minimal sovereign credit exposure except for an immaterial amount in government securities
bonds to a single non-European sovereign, as well as a guarantee on a leveraged lease from a Western European
government agency. However, Regions does have country exposure, which is defined as the aggregation of
exposure Regions has with financial institutions, companies, or individuals in a given country outside of the
United States. The majority of these exposures are in the form of derivative hedges (interest rate and foreign
exchange), corporate securities and leveraged lease guarantees. This exposure is concentrated in highly-rated,
Western European countries but not in those most severely affected by the recent Eurozone turmoil. In addition
to Western Europe, Regions’ corporate securities include investments in corporations domiciled in other
countries in Eastern Europe, North America and Australia.
Regions has other smaller exposures in the form of trade confirmations, due from clearing accounts and loan
participations with counterparties domiciled in countries in other regions, such as Latin America, Asia and the
Middle East/North Africa region.
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