* Finance minister says ready to back EU talks with Switzerland
* Move paves way for Austria to sign up to information exchange
By John O'Donnell and Annika Breidthardt
BRUSSELS, May 14 Austria edged closer to ending bank secrecy for foreigners on Tuesday, bringing it into line with the rest of the EU, saying it would not block talks between the European Union and countries such as Switzerland over sharing bank information.
Austria has been the last EU holdout on bank secrecy after Luxembourg changed tack last month.
Finance ministers from the European Union are set to give the EU Commission the green light to negotiate a new regime for swapping bank account details with Switzerland and four other countries including Liechtenstein.
The move had long been blocked by Austria, which was seeking to defend its own bank secrecy rules, but on Tuesday its finance minister dropped those objections.
"I would assume that we can unblock," Maria Fekter told reporters, on the sidelines of the meeting in Brussels.
Austria had long fought to preserve bank secrecy, and the country's softening on the issue is likely to pave the way for Vienna to follow Luxembourg in signing up to EU rules on the exchange of bank account information.
The basis of the talks with Switzerland will be the so-called EU savings tax directive.
Austria has yet to sign up to that agreement but Fekter's comments indicate this may be about to change and follows remarks from Austria's Chancellor this week that Vienna is ready to agree to give other EU countries access to foreigners' bank account details.
Chancellor Werner Faymann said he hoped for a deal before a May 22 EU summit when leaders will discuss ways to curb tax dodging, allowing the bloc to begin talks over bank secrecy with non-EU states such as Switzerland.
By giving the European Commission the go ahead to negotiate with Switzerland, EU finance ministers hope to push for the same rules to be applied to Switzerland as would be applicable to Austria and the wider European Union.
Austria has been under pressure to fall into line after Luxembourg recently said that it plans to lift bank secrecy rules for European Union citizens who have savings based in the country, marking a sharp shift in policy that will take effect from 2015.
EU citizens excluding Austrians have about 35 billion euros ($46 billion) in deposits at Austrian banks, a tenth of the banks' total deposits, while non-EU foreigners have 53 billion euros in banks in Austria, according to the country's central bank.
Fekter has campaigned to have tax talks include not just bank accounts, but also trusts and other investment vehicles designed to cloak investors' identities. She has urged Britain and the United States to crack down on money laundering and "tax havens" in their own backyards.
Most developed countries share information on taxpayers and depositors "on demand". But since this requires the authorities in the requesting jurisdiction to suspect wrongdoing, it only has limited impact in uncovering unlawful behaviour.
Automatic exchange of information allows tax authorities to more easily spot tax evasion or illicit money flows. (Additional reporting by Ingrid Melander; Editing by Susan Fenton)