Don't privatise RBS – break it up into local banks, urges NEF thinktank

New Economics Foundation says 79% taxpayer stake in bailed-out bank should be used to create 130 locally run banks, boosting GDP by 38bn

Royal Bank of Scotland could be broken up into 130 locally run banks and operated along the principle of the John Lewis Partnership rather than be privatised by the next government, according to a report published on Wednesday.

In an attempt to reopen the debate about the future of the bank as it prepares to publish its 2014 results on Thursday, the New Economics Foundation argues that carving out local banks would bolster GDP and be more beneficial than using the proceeds of any sale of the stake to cut the national debt.