Preface: I've just run into a bit of an issue with a bank, regarding an international money transfer that I made from the UK (with Lloyds TSB) to Australia (St. George).
The transfer was sent on the
18th May 2012 and was returned to my account (as apparently the account I sent it to is closed - even though it isn't) on the
28th May 2012. However, the amount returned is far less than the amount sent, and from what I understand, the bank (Lloyds TSB) has bought back the
AUD for a rate far below market value.
I chose to send money out in
AUD to ensure the correct amount was sent, so my
317.90 GBP was converted to
500 AUD and transferred (this pre-transfer exchange I was told was to guarantee that I would only pay
317.90 GBP for
500 AUD rather than sending a fixed sum in
GBP to be exchanged when it was received in Australia).
XE.com historical mid-market rate for the
18th May 2012 for buying
1.608. On the receipt from Lloyds TSB, they've marked they're buying at
1.5728, a small
11 AUD difference for the total sum sent, which I'm fine with.
However, the sum received when the money was sent back is only
276.58 GBP which is a vast difference from the
317.90 GBP I transferred. I was told by Lloyds TSB that St. Georges wouldn't levy any charges, as they would be paid a separate "agent's fee".
With that in mind, it seems like they've bought back the
500 AUD being returned at a rate far below market value - the
XE.com mid-market rate for the
28th May 2012 is
500 AUD to
276.58 GBP is a rate of
Question: Is my understanding of currency exchange rates correct, in that there is what's considered a "market rate" and when buying currency from your local bank or bureau de change they buy/sell at a rate slightly below/above market value so as to make money on the margin?
Also, can anyone tell me if this is the norm for banks to make such a large margin on converting an international currency back into a local one?
Any help would be greatly appreciated :)!!