MediaWorks' chief executive, Cam Wallace, has told staff there is no place for John Banks at the media company as long as he is boss.
In addition to Banks being removed from air, advertisers pulled their support from Magic Talk Radio after Banks agreed with comments that the Māori culture was from the Stone Age.
The exchange came after a caller named Richard called into the Magic Talk Mornings programme on the talkback station on Tuesday to discuss the of Oranga Tamariki's chief executive, Grainne Moss.
Richard told Banks Māori were a "stone age people with a stone age culture" and "genetically predisposed" to crime, alcohol addiction and educational underperformance.
Instead of pushing back, the former National and Act MP and Auckland mayor told Richard his kids would have to "get used to that stone-aged culture because if their stone-age culture doesn't change, these people will come through your bathroom window".
Banks yesterday apologised on air and claimed he had not understood Richard's comments, saying he made "generic negative statements about Māori people and practices that could have been misconstrued as racist".
"I'm not racist," Banks said.
Wallace said Banks would not be returning to air.
"Yesterday ... was a very tough day because of the events which played out on air on Magic Talk," Wallace said in an email to staff.
"It's extremely disappointing for all the committed staff who work here for this incident to occur. This type of behaviour is totally unacceptable and will never be tolerated.
"You will be aware of the steps we have taken to deal with this issue. For clarity, John Banks will no longer have a position on air or otherwise while I am CEO of MediaWorks."
Advertisers had also walked away from the station.
Trade Me spokesperson Logan Mudge said the company pulled its advertising as soon as they were made aware of the segment.
"We are currently looking into the incident and our own advertising policies going forward," he said.
"We have no plans to reinstate our advertising with Magic Talk at this time."
KiwiBank said it "condemns racism in any form".
"We've removed our ads on the Magic Talk website and have also been in direct contact with MediaWorks on how they could better encourage a diverse and inclusive Aotearoa. We've received positive feedback from our customers and the broader community for the position we've taken.
"We are always reviewing where we advertise but have no plans at this stage to return our advertising to Magic Talk."
Vodafone and Spark also suspended its advertising with the station, and the comments prompted the Blackcaps to express they were "disgusted and appalled" by the exchange.
NZ Cricket and Magic Talk last year entered into a three-year broadcasting rights deal, but NZ Cricket said it reserved the right to review its relationship if strong action was not taken.
In a statement this afternoon, MediaWorks said it had met with NZ Cricket to discuss Banks' comments.
It said it agreed with NZ Cricket's dismay at the comments and wished to apologise unreservedly for the offence they had caused.
The statement said MediaWorks supported New Zealand Cricket's zero tolerance stance towards racism and the organisation's alignment with the New Zealand Human Rights Commission's "Give Nothing To Racism" campaign.
It said NZ Cricket had accepted MediaWorks' response and they would continue to work together.
Banks was filling in for regular host Peter Williams.