MILAN, Jan 14 (Reuters) - A boardroom battle at Generali (GASI.MI) has escalated after the No.2 investor in Italy"s biggest insurer resigned from the board in a challenge to the reappointment of CEO Philippe Donnet. Donnet"s bid for a new term as chief executive is at the centre of a struggle among Generali"s biggest investors, including construction and newspaper magnate Francesco Gaetano Caltagirone, who stepped down from the board on Thursday. "It seems we may be reaching some "crunch point"," Autonomous Research said. Caltagirone has teamed up with eyewear billionaire Leonardo Del Vecchio to challenge the influence of investment bank Mediobanca (MDBI.MI), Generali"s biggest investor. read more Caltagirone holds 8.04% of Generali, trailing Mediobanca"s 12.8% stake. Del Vecchio is the No.3 investor with nearly 7%. The two tycoons blame Mediobanca, which reaps a sizeable share of its income from Generali, for holding back the insurer"s expansion, people close to the matter have said. Donnet, who is backed by Mediobanca and a majority of board members, in December announced Generali"s first buyback in 15 years and higher dividends. read more With Italy"s financial sector in consolidation mode, the shareholder tensions are fuelling speculation about possible M&A moves involving both Generali and Mediobanca. Del Vecchio, 86, became Mediobanca"s biggest shareholder in 2019. Caltagirone has also recently built a stake in the Milanese investment bank that used to pull the strings of Italy"s biggest companies thanks to its extensive shareholdings. GROWING HOSTILITY Caltagirone and Del Vecchio are set to present their own CEO candidate next month, along with an alternative strategy for the insurer, a person close to the matter told Reuters on Friday. Caltagirone"s offensive began in April when he snubbed a general meeting to approve Generali"s results. In a sign of growing hostility, he voted against Donnet"s new strategy in December and has not attended board meetings lately, a second person with knowledge of the matter said. He tendered his resignation in a three-page letter addressed to the Generali chairman, the source said. Generali said on Thursday that Caltagirone had complained he had been prevented from giving his "critical contribution" to matters such as the group"s new business plan or board nominees. The company"s current board could begin the selection process for its renewal as early as next week. Caltagirone and Del Vecchio in September struck a pact to consult over moves at Generali. After increasing their respective stakes and bringing smaller investor CRT on board, they control a combined holding of a little more than 16%. The pact is intact after Caltagirone"s decision, a third source close to Del Vecchio said. To carry more weight at a shareholder meeting in April to name the new board, Mediobanca has borrowed shares to reach a 17% voting stake. But about 35% of Generali"s share capital is in the hands of institutional investors and small savers hold another 23%, meaning their votes are likely to decide the outcome.