Oct. 6 (Bloomberg) -- Royal Bank of Scotland Group Plc, the U.K.'s second-biggest bank, had its credit rating cut for the first time in almost a decade by Standard & Poor's because the company's ``financial profile'' is deteriorating.

Edinburgh-based RBS had its long-term and short-term counterparty credit ratings lowered to A+/A-1' from 'AA-/A-1+' by the London-based analysts in a statement today. The Last time the rating was reduced was in December 1998.

``The rating actions reflect Standard & Poor's expectation that RBS's financial profile may continue to weaken,'' the analysts said, citing a ``combination of mixed earnings prospects, deteriorating credit risk in its key geographies, and difficult market conditions'' in which to shore up its capital.

RBS fell 20 percent in London trading, the most since September 1988, following reports the U.K. government may buy stakes in British banks to help stabilize the banking industry. That action would ``massively dilute'' investors' shareholdings, said MF Global Securities Ltd. analysts led by Simon Maughan in London.

To contact the reporter on this story: Ben Livesey in London blivesey@bloomberg.net

Last Updated: October 6, 2008 11:55 EDT