The big US rating agency laid much of the blame on the severe impact of the UK recession.
The downgrading provides a sombre background to the clearing banks' half-year results, due to start emerging at the end of the month. These will reflect the continuing costs of the property crisis and the collapse of small and medium sized corporate borrowers.
The banks have dropped broad hints that provisions will fail to improve and Barclays is thought certain to announce an increased charge for bad debts compared with a year earlier, as it catches up on its property lending provisions.
Ian Poulter, bank analyst at Yamaichi, said he expected Barclays pre-tax profits to fall to pounds 81m in the first half compared with pounds 378m a year ago, and bad debts to rise to pounds 900m from pounds 676m, much of it due to problems in property lending.
Warburg is forecasting pounds 120m before tax for Barclays and pounds 110m for NatWest, against pounds 101m a year ago.
NatWest's rating has been reduced from AA plus to AA. NatWest and Barclays lost their triple-A ratings last year as the economy stayed in recession and bad debts worsened.
S&P said it believed the recession had had a far more damaging effect on UK banks than previous recessions and the negative impact might continue for a longer period.
The ratings cut reflected structural changes in NatWest's balance sheet and problems in the UK economy, where the lingering recession, high real interest rates and the prospect of only sluggish future growth were likely to prevent a strengthening of the bank's balance sheet in the near future.
Underlying operating profitability remained very good and capital adequacy remained comfortable, S&P said, but the decline of recent years had continued. Further heavy provisioning in the US and the UK had eroded profitability and hit balance sheet strength.
Loan quality had been weakened by the lengthy UK recession and by property problems in the US.Reuse content