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UBS CEO: Deutsche Bank not indicative of Europe's banking system

Unlike most, UBS Chief Executive Sergio Ermotti does not consider Deutsche Bank to be a serious threat to the stability of European banks.

Ermotti told CNBC's "Squawk on the Street" on Thursday that he "wouldn't look at one idiosyncratic situation as being a good proxy for the entire banking industry" in Europe, noting that the sector is actually quite sound and has made huge progress over the last seven or eight years in terms of addressing banks' capital positions and improving their business models. He was speaking on the sidelines of the World Bank/International Monetary Fund meeting in Washington.

The CEO acknowledged that the sector has been subject to some suffering, but mostly because of macroeconomic conditions in Europe like an overall lack of growth and over-capacitated industries.

If only the banking sector takes a hit, the problem is solvable, Ermotti contended, so long as potential collateral damage is kept under control. He cited possible negative effects of a situation like Deutsche Bank's, which just led to worldwide job cuts at the lender. Ermotti said the impact could result in falling consumer confidence and potential stock market bubbles.

It's time, Ermotti insisted, to find a resolution and "create a better framework" to address problems like Deutsche Bank's. Talking about the problem without finding an effective solution will only create more uncertainty, he said.

"Central banks, on their own, cannot address the structural problems we are facing, particularly in Europe," Ermotti said. "Central banks can only help transition it from one place to the other. It's not the only medicine available to address the issues we have," he said.

A more concerning issue than Deutsche Bank (and one not exclusive to the banking sector) is the presence of low and negative rates in Europe, the CEO said. "I am more concerned about the savings and social system being put under pressure" by declining rates, he added.

Regarding Brexit, Ermotti is focused on the question of access to London, which he said will remain a "very important financial center" — at least for now.

"I can't imagine London keeping the same status as they have today if there is no passport into Europe," Ermotti said, adding that negotiations are still underway and maintaining the British capital's reputation as a global business center likely remains a top priority.