spend [O.E. spendan borrowed < L. expendo or dispendo, to expend, to dispense.] To expend or pay out, as funds or wealth. --v.i. To make disbursements or expenditures.
--Webster's
Note that the word is tied to the notions of "paying out" and "disbursement," both characteristics of a loan. Also please note that this link goes clear back to the word's Latin/Old English roots, including the strict definitions "dispense" and "borrowed."
In sum, and using the common definition, a bank "spends" money when it loans it to you, just as you "spend" it when you pay it back with interest.
Yes, we disagree on the definition of spend.