It came as Banks - who has also been an MP and had a long career in the media - was earlier filling in for regular host Peter Williams on Magic Talk's morning show.
On Tuesday, Banks took a call from a listener identified as Richard, who said Māori were "victims of their own genetic background. They're genetically predisposed to crime, alcohol, and underperformance educationally".
With Banks declining to interject, Richard continued, saying he was not interested in learning about, or having his children learn about "their stone-age culture".
When Banks next spoke, he said "your children need to get used to their stone-age culture, because if their stone-age culture doesn't change, these people will come through your bathroom window".
The comments were widely condemned on social media.
MediaWorks' Wallace subsequently labelled Banks' actions as "extremely disappointing".
"This type of behaviour is totally unacceptable and will never be tolerated," he told staff today.
"John Banks will no longer have a position on air or otherwise while I am chief executive officer of MediaWorks."
NZC is disgusted and appalled by an indefensibly racist exchange between a talkback caller and host John Banks on...
Posted by Blackcaps on Tuesday, January 26, 2021
"I'm confident this is an isolated incident because I know the culture here at MediaWorks is inclusive and accepting."
MediaWorks also said it had met with NZC to discuss the incident.
"MediaWorks agrees with NZC's dismay that comments made by both caller and host were wholly unacceptable, and wishes to apologise unreservedly for the offence they have caused," the company said.
"MediaWorks supports NZC's zero tolerance stance towards racism and the organisation's alignment with the New Zealand Human Rights Commission's "Give Nothing To Racism" campaign, which has recently featured both Blackcaps and White Ferns."
MediaWorks said NZC accepted its response and the organisations would continue working as broadcast partners over the "remainder of the summer and beyond".
The Black Caps earlier posted to Facebook, saying they were "disgusted and appalled" by the exchange between Banks and the caller.
Māori Council executive director Matthew Tukaki said the sentiment behind the on-air comments were similar to the racist ideology that led to the Christchurch mosque attacks.
"At the end of the day, Māori culture was rich and strong before anyone else came along," said Tukaki.
"We were growers of our own kai, cleaners of our own rivers, and developers of our own land. That is not a stone-age culture, that is a sophisticated society."
Banks issued an apology on air a day after the incident, saying he had not picked up the comments made by the caller, and that the caller's comments were wrong and racist.
"I also made some generic negative statements about Māori people and practices that could have been misconstrued as racist. And I apologise for that, it's not my intention. I'm not racist. I'm not racist," said Banks.
* Additional reporting by the Spinoff
