Question: 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?

Answer: 
**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.
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.