I have an IB account that was funded with a wire transfer from a domestic US bank. US banks are not able to hold EUR denominated deposits and currency conversions although possible with European banks, are very expensive (200 - 500 pip spreads!). Therefore, I would like to convert the IB funds to EURs and then transfer them to a European bank. Is this possible?
Yes. Just sell dollars for euro and then wire the funds to your bank in Europe. That is why they have different receiving banks for each currency.
Sure you can. Two notes though: you must transfer to an account of which you are the holder (so you can't use IB directly to, say, pay another person). And choose a bank which are member of the SEPA (Single Euro Payment Area) protocol, it's an european standard, IB supports it, and your transfers will be much cheaper. Regards Andre