A man is facing multiple kidnapping charges following a hostage situation in the Bay of Plenty.

Emergency services were called to BNZ Bank on Amohau Street in Rotorua at 3.55pm on Thursday, after a man allegedly entered the property and took a group of people hostage, says a police spokesperson.

Cordons were established and armed police, along with the armed offenders' squad were spotted around the bank.

A storeowner across the road says more than 15 armed police were on site and asked the stores nearby to lock up and stay inside.

Ebony O'Brien, who works at a Mexican restaurant across the road, was stopped by armed police as she tried to get to work.

"We saw lots of people with guns ... dogs and we could see the people inside, like the guy he was kind of like he was just waiting around like he was talking to the officers through the windows," she says

Another eyewitness says police were communicating with the man from outside the store and an hour after they arrived the hostages were released.

Soon after the man came out with his hands on his head and laid on the ground, O'Brien says.

Witnesses clapped as the man was arrested, she says.

BNZ says it's supporting those who were held hostage at its Rotorua branch.

Chief executive Dan Huggins thanked the actions of the police and says he's glad the BNZ staff and customers were safe.

'The hostages were released from the bank at 4.50pm and were uninjured,” says police.

'The alleged offender has been taken into police custody.”

The 35-year-old man has been charged in relation to an incident and is scheduled to appear in Rotorua District Court today.

'As the matter is before the Court, police is unable to provide any further information.”

-Addtional reporting by RNZ.