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I asked my Swedish bank to transfer to my UK bank 50,000 euros through a SEPA payment. Unfortunately, the IBAN and BIC were old and no longer in use and the UK bank returned the money the same day, i.e. the transaction failed. The 50,000 euros was put back into my account after conversion to Swedish kronor (SEK).

However, the amount refunded was signficantly less (about 633 euros) owing to a different exchange rate being used for the conversion EUR=>SEK.

Should the Swedish bank not have used the same rate for the refund? In other words, should not the sending of the wrong codes have simply resulted in a reversal or cancellation of the transaction?

  • 5
    What did your bank say about this when you asked them? – Vicky Nov 27 '18 at 15:20
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    They said they would try to get me a more favourable exchange rate, but just referred to the fact that they used buy and sell rates on conversion. – Ekorre Nov 27 '18 at 15:21
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    You are talking a 1.3% fee for two exchanges, that does not seem very high. Given that the error was a mistake on your part, this is probably a cost that you will have to bear. – Pete B. Nov 27 '18 at 15:55
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    Aaaand, it's gone. Poof! Please step aside for people who actually have money with the bank. youtube.com/watch?v=TGwZVGKG30s – Greg Schmit - Reinstate Monica Nov 27 '18 at 22:09
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    NB: it's worth shopping around for a lower fee transfer when making such a big transfer. There are several new fintech companies such as Transferwise or others that sometimes significantly undercut traditional financial institutions in their pricing for currency transfers, but even older ones like Western Union might save you a lot of money compared to classic big banks. – gerrit Nov 28 '18 at 10:12
38

It isn't a simple reversal, because money actually changed hands when the transfer was made.

When the transfer was made 50,000 Euros was credited to a UK bank, and some number of kronor was debited to your Swedish bank. When the transaction was reversed 50,000 Euros were transferred back to the Swedish bank. Those Euros are now worth fewer kronor, so your Swedish bank ends up with fewer kronor in its coffers.

There would be only two ways of fixing this. Either the UK bank sends more than 50,000 Euros, or the Swedish bank tops up your account. Either costs one of them something, and banks are not going to pay you for a mistake you made.

  • 2
    I don't think this was because the exchange rate moved, but that the rates the bank used include a nice fat profit for the bank. The actual FX costs to the bank for converting it to Euros and back would be around €5. – Robin Salih Nov 28 '18 at 14:37
  • Question says " owing to a different exchange rate being used for the conversion" – DJClayworth Nov 28 '18 at 14:39
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    @DJClayworth yes, because the bank uses a different exchange rate for conversions from and to euros. Not because the rates changed this much. – Josef Nov 28 '18 at 15:29
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    Well yes, bid/ask. Always different, no surprise. – Damon Nov 28 '18 at 16:41
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    @Damon the actual bid/ask difference is minuscule compared to the difference in rates the banks give you when buying/selling foreign currency. – user2705196 Nov 28 '18 at 22:56
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Most likely this will be an expensive lesson to learn. However, I believe there still is a chance to recover some of the difference, since your wording of "my Swedish bank" and "my UK bank" implies you have a relationship with both banks.

If your Swedish bank converted the funds to Euros first, and then attempted the transfer, then your Swedish bank made a profit when converting it back. If the UK bank received SEK and did the conversion, then the UK bank made a profit by not returning the full amount. Either way, you may ask the bank that profited off of you if they would be willing to make you whole again. If it's the UK bank that needs to do it, I'd guess they would be more willing upon receiving the transfer again properly.

Good luck, and please let us know if you do end up getting some or all of it refunded.

  • SEPA payments are in euros and no conversion was made by my UK bank (e.g. if it had known about the failed transaction, it would have received euros and converted to GPB). The money (euros) went straight back to Sweden, presumably in a matter of seconds. – Ekorre Nov 27 '18 at 16:22
  • GPB should read GBP! – Ekorre Nov 27 '18 at 16:33
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    @Ekorre - right, so it seems your Swedish bank made a profit. I'm surprised they didn't just leave the funds in Euros knowing you may want to try again with different numbers, or at least ask you first what you wanted to do. Perhaps their automated process doesn't offer that option. If this is a bank you will continue to have a relationship with, I'd like to think they will work with you on this, especially considering your high account balance with them. – TTT Nov 27 '18 at 17:27
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    I've just been told that if the transfer had been in the form of an international payment (i.e. in SEK) I would have been asked for the correct IBAN/BIC and the money that was bounced back would not have been paid back into my account. The department dealing with the SEPA payment only became aware of this yesterday. It gets stranger and stranger. – Ekorre Nov 28 '18 at 15:37
5

What the bank 'should' have done is a question of law, but I will point out that the reason for the rejection was not the bank's error, it was yours / the payee's [which, in the bank's eyes, is still kind of your error].

Consider from the bank's point of view:

(1) You release 50k SEK from your account;

(2) The bank, seeing it is headed to a EUR account, converts it to EUR for you, at their available rate [of course, they will take a cut off of the conversion];

(3) The bank sends the EUR off to the account you requested;

(4) The EUR is rejected due to invalid account;

(5) The bank needs to convert the EUR back to SEK for you [again, they do likely take a cut], at a conversion rate that happens to give you 633 less SEK than what you started with.

If the bank did as you ask, and used the same rate to convert your refund in step 5 as your original conversion in step 2, they might have lost money. ie: if the SEK had strengthened in between step 2 & step 5, then it would have cost the bank more EUR, out of their own pocket, to get you your SEK back. They are not a charity, so they chose to charge you the regular conversion rates in both steps.

Whether they should do as you ask is probably a question of law; whether they might do as you ask is probably a question of customer relationship. That is, if you were worth 633 SEK to them, they might swallow their pride and give you your original value back, if you asked nicely.

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    The transfer was in euros. – Ekorre Nov 27 '18 at 16:24
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    While the bank may agree to waive any conversion fees it charged if asked nicely, I'd be a lot more surprised if they agreed to waive any adverse shift in the actual values in the currency between the two conversions. OTOH the fees are probably much larger than any actual shift in currency value. – Dan Neely Nov 27 '18 at 16:51
  • @DanNeely Fair comment - I avoided discussion about the difference between the spread from the banks vs the actual fx rate, but over a period of a couple days, I would assume generally that the portion of cost related to the bank's spread is probably at least 5x any difference in rates over that period. – Grade 'Eh' Bacon Nov 27 '18 at 18:07
  • Why does the conversion back to SEK have to occur? Why can't they just keep it in EUR when they got it back? And, why can't banks verify accounts before doing the conversion in the first place? – Brad Nov 28 '18 at 4:48
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    @Brad Bank accounts are nominated in a certain currency. They can't deposit EUR into a SEK account. That's why they convert back to SEK. – Emil Vikström Nov 28 '18 at 11:26
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The other answers attribute the loss due to changes in conversion rates. For me the change seems to be more due to the buy/sell rate difference. Every FOREX agency/ bank sets the rates different on purpose so that they make profit on each transacation. I checked a few online websites( transferwise, revolut) and your cheapest conversion fee is approximately 150 Euro for such a large transaction. I assume banks don't do this as cheap as these websites and your one-way conversion fee was indeed around 300 Euro which probably made you a loss of this 633 Euro. Since SEPA transfer in EURO is completely free, this complete fee of 633 Euro was pocketed by your Swedish bank. Depending on how valuable customer you are, they could compensate you somehow although it was your mistake.

In a comment you mention, you need GBP. Then why are you even converting to EURO? Every conversion involves fees and for such huge amount it could easily be another 300 Euro fees when converting to GBP again. Unless this is throw away money for you, DON'T CONVERT MULTIPLE TIMES!!! I suggest finding an alternative if your banks don't support SEK->GBP direct conversion.

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    Alternative: I would recommend TransferWise. They charge 0.3% of the amount that's converted + 13.00 SEK to convert SEK to GBP, and they convert at the mid-market rate (so as I type, the recipient would get £4,277.67 for 50,000 SEK). (No relationship to TransferWise other than as a satisfied customer.) – Martin Bonner supports Monica Nov 28 '18 at 10:38

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