WASHINGTON, March 21, 2023 (BSS/AFP) - The US banking sector is "stabilizing"

after the recent failures of Silicon Valley Bank and Signature Bank rattled
the industry, Treasury Secretary Janet Yellen will tell a summit Tuesday,
according to prepared remarks.

The collapses caused a crisis of confidence, with many customers of similarly
sized banks withdrawing their money and depositing it in larger institutions
-- considered too big for the government not to bail them out if they faced
failure.

But "aggregate deposit outflows from regional banks have stabilized"
following authorities' moves to shore up confidence and stem contagion,
according to Yellen's remarks.

"Our intervention was necessary to protect the broader US banking system,"
she will say in a speech to the American Bankers Association's Washington DC
summit.

"And similar actions could be warranted if smaller institutions suffer
deposit runs that pose the risk of contagion," she adds in the excerpts.

After SVB's collapse, the Treasury, Federal Reserve and Federal Deposit
Insurance Corporation set out plans to ensure its customers would be able to
access their deposits. A similar exception was announced for Signature Bank.

The Fed also introduced a new lending tool for banks in an effort to prevent
a repeat of SVB's quick demise, and has since launched a drive with other
major central banks to improve banks' access to liquidity.

- Reducing risk -

"I believe that our actions reduced the risk of further bank failures,"
according to Yellen's remarks.

For now, she maintains that the US banking system remains sound.

But there are fears over which lender could be the next domino to fall, with
11 US banks announcing last week they would deposit $30 billion into First
Republic amid worries surrounding the bank.

A coalition of midsized US banks has also asked federal regulators to
guarantee all of their customers' deposits for two years, a move that would
help to halt an "exodus of deposits" from smaller banks, Bloomberg reported
Saturday.

Financial authorities have been scrambling to ease fears while worries of
contagion spread to Europe, as Switzerland's second biggest bank Credit
Suisse came under pressure.

Rival UBS has since agreed to take over Credit Suisse in a government-
brokered deal after days of market upheaval.

While US and European markets picked up on Monday, analysts say investors
remain wary.

But Yellen, in her speech, is set to try to reassure bankers of the Treasury
Department's commitment to safeguarding the "health and competitiveness" of
the community and regional banking institutions.

"You should rest assured that we will remain vigilant," according to her
speech.