* 15 bln stg share sale to begin in 2018
* Shares to be sold over 5 years
* Previous attempt stymied by Brexit
* RBS shares fall 0.7 pct (Recasts, adds background, share reaction)
LONDON, Nov 22 (Reuters) - Britain will reprivatise bailed-out lender Royal Bank of Scotland by selling 15 billion pounds ($20 billion) of shares, according to budget documents released on Wednesday, in a boost to finance minister Philip Hammond's coffers.
The government will begin the delayed share sale by selling 3 billion pounds of shares in RBS before the end of the 2018-19 fiscal year, the government said. The 15 billion pounds of shares will be sold over five years.
The British government pumped 45.5 billion pounds into RBS in the depths of the financial crisis, and efforts since then to recoup the money have been stymied by the bank's plunging share price, regulatory probes in the United States and Brexit.
At the current share price of 270 pence, little more than half the 502 pence the government paid for them, the Treasury stands to lose billions of pounds on the sale.
The share sale would represent around two thirds of the government's 71 percent stake in RBS at current market prices.
"We welcome the recognition from the government on the progress we have made and the support for our strategy. We continue to deliver a simpler and safer bank focused on our customers in the UK but the timing of any share sale is a matter for the government," an RBS spokeswoman said.
The plan comes as a boon to Hammond, who on Wednesday delivered a gloomy budget statement to parliament warning of lower tax revenues.
A government plan to sell part of its RBS stake was scrapped last year in the wake of the Brexit vote.
Another obstacle to selling the shares has been a claim by the U.S. Justice Department that the bank, like many of its peers, mis-sold toxic mortgage-backed securities in the run-up to the financial crisis.
RBS Chief Executive Ross McEwan has said he expects to settle the case this year, although formal talks have not started.
McEwan and bank investors alike see resolving the case, which analysts have estimated could lead to a fine as high as $12 billion, as a prerequisite for the bank being able to exit government ownership.
RBS shares fell by 0.7 percent by 1451 GMT, against a 1 percent increase in the STOXX European banks index.
The independent Office for Budget Responsibility (OBR) said the government's expected losses from rescuing failed banks during the 2007-2009 financial crisis narrowed to 21.8 billion pounds from 23.5 billion pounds in March.
The OBR said the government now faces a 26.2 billion pound loss on its stake in RBS, down from a previous forecast of 29.2 billion in March, after a recovery in the value of the bank's shares. ($1 = 0.7540 pounds) (additional reporting by Andrew MacAskill, editing by Louise Heavens and Adrian Croft)