I have UK and French accounts with the same bank. Both work fine for making payments in other EU countries. I can transfer money between them whenever I want (or spot a better exchange rate).
Using an Austrian bank account in Germany was basically indesitnguishsble from using a German bank account. Nevertheless opening a German bank account was trivial.
And all bank transfers within the EU (not sure if the U.K. is a special case) are free of charge, and IBAN/BIC used everywhere. I routinely transfer money between my Austrian and German accounts.
