Since we already reached the stabilization phase of xenial/16.04 with .5 (and 
.6), with the focus on stability and security, and because this is not a really 
bug, rather than 'nice to have' to _not_ show /dev/kvm in case already running 
virtualized on KVM (because nested KVM is not supported on s390x), I'm now 
going to change this Bug to Won't Fix.
In anybody objects please leave a comment ...

** Changed in: ubuntu-z-systems
       Status: Triaged => Won't Fix

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https://bugs.launchpad.net/bugs/1735420

Title:
  Avoid creation of /dev/kvm in Xenial KVM virtual machines on s390x

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