A police spokesman said the attempted robbery happened about 11.30am and confirmed no staff were injured.
The bank was closed for the rest of the day and police cordoned off the area while a scene examination was conducted.
Police were still searching for the offender last night but could offer no further update.A BNZ bank spokeswoman said staff involved were "safe", but had been left "upset" and "badly shaken" by the incident.
She declined to comment further. Dunedin Kindergarten Association senior teacher Christine Kerr said the Mosgiel Central Kindergarten was locked down for a short time because it was next door to the bank.
The children were allowed to continue playing indoors and were "blissfully unaware" of the drama, she said.
Visique Peter Dick Optometrist receptionist Jill Obeek was across the street, but said the attempted robbery was all over by the time she noticed something was happening.
"The first thing I noticed was a policeman walking down the street and I thought, ‘oh, has he got a gun?’ and then I thought, ‘no, it can’t be’. I looked up a couple of times and saw police in the bank and I just thought they were doing their banking."
Campbell and Sons funeral director Cam Weston said he was holding a funeral in Gordon Rd at the time.
"One of our staff got a text to say don’t go on Gordon Rd because the police said there was an armed person there.
"So we asked everybody not to move until we had clarified the situation with the police."
It is not the first time the bank has been targeted by a robber.
It was robbed in 2007 and 2008. No weapons were involved in those incidents.
