* Blocher wants UBS, CS to split off U.S. businesses
* Repeats opposition to higher Swiss capital rules
* SVP opposition could mean plans delayed or amended
ZURICH, April 23 (Reuters) - The popular right-wing Swiss People's Party (SVP) is against government plans proposed this week to tighten regulation of the country's biggest banks, saying it wants them split up to cut risk to the Swiss economy.
Christoph Blocher, former justice minister and SVP mastermind, said his party would oppose legislation the government handed to parliament on Wednesday to force the big banks to meet tough new capital standards. [ID:nLDE73K06O]
"The cabinet forgoes a division into independent businesses. In that way, the Swiss taxpayer would still be liable for the bankruptcy of a CS or UBS bank in the United States," Blocher told the Tages-Anzeiger newspaper in an interview.
The SVP, expected to remain Switzerland's biggest party in national elections in October, originally supported the rules proposed by an expert commission in October but Blocher already signalled in March it would oppose the government's plan.
"The most important thing is that the banks should be obliged to split off their excessively big American parts because up until now it was the American parts which caused the banking crisis in Switzerland," he said.
"If we hived off America, we would also automatically separate investment banking from the less risky wealth management business in Switzerland."
The government has proposed UBS and Credit Suisse will need an equity Tier 1 capital ratio of at least 10 percent, versus the 7 percent minimum set under the Basel III global standards which begin to take effect in 2013. [ID:nLDE73D1EK]
Blocher reiterated earlier comments that his party opposed the Swiss capital rules being tougher than Basel III as that would put UBS and Credit Suisse at a disadvantage and could make credit more expensive in Switzerland, hitting jobs.
UBS Chief Executive Oswald Gruebel has warned the rules could force Switzerland's biggest bank -- which had to be bailed out by the state in the financial crisis -- to move some activities abroad or change its structure.
The government said on Wednesday parliament could vote on the matter before the end of the year so the plans could come into force by the start of 2012 at the earliest, with a transition period up to 2018 to allow implementation.
But the SVP's opposition suggests the proposals may still be amended or delayed. (Reporting by Emma Thomasson; Editing by Sanjeev Miglani