A fish and chip shop owner's trip to the bank took a gruesome turn when he spotted an elderly man floating face down in the water near Rocks Rd in Nelson.

Bruce Maxfield, who co-owns The Sands Fish and Chip Shop, promptly pulled over his station wagon at about 10.15am today to get a better look at what he initially thought was an orange lifejacket.

"Only to reverse up and find it was attached to a gentleman. It wasn't a lifejacket, it was a high-vis vest."

The body was floating in the harbour opposite 551 Rocks Rd where the popular swimming steps are.

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The police arrived within minutes and Maxfield's partner and a police officer waded into the water to retrieve the body.

Dollar notes were floating in the harbour and the Coastguard was called to try and find the man's wallet in the hope it would reveal his identity.

Other people could be seen also looking in the water for the items.

Maxfield recognised the man as a customer from his nearby shop and said he was in his 70s or 80s.

"We didn't know him well enough to put a name to him unfortunately."

Tahunanui man Roy Gray, co-owner of The Sands Fish n Chips, jumped out of his car to help after being flagged down by a passerby.

"I thought I'd better jump in the water and grab him but I rang triple one first and they said just wait for police, they'll be there in seconds and as soon as police got here we both jumped in the water, grabbed him, brought him out and two or three other guys helped and lifted him up onto the top and they did CPR but unfortunately it wasn't successful.

"Unfortunately I don't know his name but he was a beautiful man."

Acting sergeant Brett Kindley says police have launched an inquiry into the incident.

"Police have arrived to assist members of the public extracting that person from the water, unfortunately that person has died and we are now instigating an inquiry around the events leading up to that and possible cause."

Items, including papers, were found in the water near where the man was found, but police say it's too soon to say whether they belonged to him.

Roy, who was still shaking after the incident says the man's death is "a real shame".

"It's shocking and I feel more for his family, I'd say what he was doing was he was walking along here with his walking stick and his wallet has probably fallen out of his pocket and gone into the water because it was his tide, right to that step and he's probably gone down to get it and lost his balance and gone in.

"If we had only been about five minutes earlier it might have been a totally different outcome."

The scene is now cleared and an ambulance drove the body away.

A nearby worker, who did not want to be named, said she saw a crowd gather about just after 10am. She said the body was found very close to the seawall.

A police media spokeswoman said police were still investigating the cause of death and identity of the body.

Police are appealing for information from the public. If you saw anything unusual at around 10.15-10.20am please call police on 546 3840.

- Additional reporting: Nelson Weekly