Can banks hold overseas money when it is transffered into their bank to make interest on it?

Answer 1

If you have deposited the money in your account, it is your money; they will need to pay you standard interest. They can (and most likely will) place a hold on the foreign check until it clears. This is a safe-guard to help eliminate scams from people depositing fake checks.

Answer 2

Of course. It's a bank. They use your money to make their profits.