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Ratings agency Fitch has warned that deflation is a meaningful risk to eurozone sovereign creditworthiness, and an important factor in rating financial institutions.

Speaking at the Fitch Ratings Global Banking Conference in London, James Longsdon, managing director of the financial institutions group, stressed that eurozone deflation is the risk with the most unfavourable impact and the highest urgency to global financial institutions, followed by peripheral Emea contagion and legal risks (conduct fines).

New risks being considered by Fitch include cybercrime (highly unfavourable impact but low urgency), and prolonged low oil prices (slightly unfavourable impact and low urgency).

In terms of a Brexit, the agency expects the UK to remain in the eurozone after the referendum (which should take place in the next two years), and therefore has not yet reflected that risk in its ratings. However, Douglas Renwick, senior director of the sovereign group, mentioned that the situation could change if polls placed the ‘yes’ and ‘no’ votes closer in the future.

Asked whether they believed Greece would leave the eurozone, 48% of conference attendees said “no”, versus around 30% who said it would happen by the end of 2016, and a minority who believe the exit will happen in the long term. Renwick agreed with this result, but pointed out that the regional implications of a sovereign debt default would be unpredictable. Greece is currently fighting the clock to secure financial aid from its European creditors, without which the country is widely expected to default on its IMF repayments due this month.

Outside of the EU, Fitch has identified India as “one of the few bright spots” in the BRICS countries, with 8.1% GDP growth forecast for 2016, while sovereign ratings in Brazil and Russia are under pressure due to political and economic crises.

Nigeria, Venezuela, Bahrain and Ecuador are seen as the worst positioned to deal with low oil prices (below US$75 per barrel), while Kuwait, Abu Dhabi and Norway are best positioned due to their strong net foreign assets and low fiscal break-even oil price.

In the US, Fitch emphasised the growth of the shadow banking sector, which is “challenging traditional banks”, though banks continue to play a key intermediary role, as well as forming a large portion of these shadow institutions’ credit capacity. “It’s important not to forget how banks are involved with shadow banks,” said Christopher Wolfe, managing director at Fitch Ratings.

Finally, in another audience poll, regulation came out as having the greatest impact on banks’ future performance (67%), above interest rates and pressure from the shadow sector – an unsurprising result that Fitch agreed with.