I'm buying a house in Austria, and wired money from my U.S. bank
account to an Austrian bank account for the purchase. The Austrian
bank is telling me that they used a "proprietary" exchange rate,
rather than the Interbank rate (
http://www.oanda.com/convert/fxhistory ) that I'm familiar with. Am I
getting screwed?
Here's the details:
Original wire amount: $240,000
Austrian bank charged me a 0.28% "processing fee" = $660.
Leaves $239,340.
Interbank rate on that day (6/6/05)= 1.2232 $/Euro.
Therefore, $239,340 should equal ? 195,667.10.
BUT, what I really received was ? 194,304.52.
In other words, the Austrian bank's "proprietary exchange rate" lifted
?1,362.58 out of my pocket.
Between the Austrian bank's 0.67% fee and the "vanishing"
amount, I lost $2,331, or 0.97% of my originally wired amount.
I suppose my real question, then, is: Do banks typically make up their
own exchange rate indices for international wire transfers, or do they
typically apply the published Interbank rates? (Okay, and, Did I get
screwed?)

The interbank rate applies to hlarge amount transaction  between
financial institutions.  When dealing with tiny amounts like your
transaction, the bank will impose a less favorable rate.  This is
common practice.

You speak of the interbank rate, but for exchange transactions there
are two rates, the buying and selling rate.  As you can imagine, when
the bank sells you Euros, it uses the rate that gives you less Euros;
when it sells US$ to someone, it uses the rate that delivers either
less $ for a set Euro amount or calculates a higher Euro amount for a
set $ amount.
Here are the exchange rates from that period. You will see that the
interbank rate lies between these buying and selling rates.

juni  	USA USD  	
2005 	Geld 	        Brief 	
1. 	1,22030 	1,22630 	
2. 	1,22390 	1,22990 	
3. 	1,22560 	1,23160 	
4. 	- 	 	-
5.      -               - 		
6. 	1,22360 	1,22960

https://www.commerzbank.de/kurse/kursinfo/devisenk/archiv/2005/kurs_0506.html